Preamble

The House—after the Adjournment on 3rd April, 1958, for the Easter Recess—met at half-past Two o'clock.

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

ESSEX COUNTY COUNCIL BILL

Read the Third time and passed.

HOLY TRINITY HOUNSLOW BILL

As amended, considered; to be read the Third time.

Oral Answers to Questions — EAST AFRICA

Higher Education

Mr. Brockway: asked the Secretary of State for the Colonies what recommendations have been made by the Governments of Kenya, Uganda and Tanganyika and the Sultan of Zanzibar for the extension of higher education in East Africa; and what financial contributions Her Majesty's Government will make towards the realisation of these recommendations.

The Secretary of State for the Colonies (Mr. Alan Lennox-Boyd): Proposals for the future development of higher education in East Africa are set out in a White

Paper published jointly by the Governments of Kenya, Uganda, Tanganyika and Zanzibar on 7th March, copies of which are in the Library. Colonial development and welfare assistance amounting to nearly £3 million has been allocated for higher education capital works projects in East Africa in the period from 1946 to 1960.

Mr. Brockway: In view of the fact that this White Paper of the four Governments proposes that there should be a university for East Africa with colleges in Kenya and Tanganyika associated with the Makerere College in Uganda, will not the right hon. Gentleman, before a short time has passed, whisper in the ear of the Chancellor of the Exchequer that a more generous grant should be made for education in East Africa?

Mr. Lennox-Boyd: This might not be the most appropriate day to do that.

Makerere College (Vacation Courses and Lectures)

Miss Vickers: asked the Secretary of State for the Colonies if he will state the number of vacation courses and lectures that have been given in 1957 by the Department of Extra-Mural Studies of Makerere College, in Uganda, Kenya, Tanganyika and Zanzibar; and how many lecturers are employed at the present time in those Territories.

Mr. Lennox-Boyd: I am obtaining this information and will write to my hon. Friend.

Miss Vickers: While thanking my right hon. Friend for that reply, may I ask him if he is aware that when I was out in the


Territories I was most impressed with the work I saw, and that I hope he will do all he can to encourage it?

Mr. Marquand: Would the right hon. Gentleman kindly circulate the information in the OFFICIAL REPORT, as there are also other hon. Members who would like to know about the very valuable work that is going on there?

Mr. Lennox-Boyd: Certainly, Sir.

Women Students, United Kingdom

Miss Vickers: asked the Secretary of State for the Colonies how many women students from Uganda, Kenya, Tanganyika and Zanzibar are receiving instruction in the United Kingdom; and how this number compares with that of the male students from these Territories

Mr. Lennox-Boyd: One hundred and seventy-two from Uganda, 184 from Kenya, 64 from Tanganyika and 22 from Zanzibar. The comparable number of men students from these Territories in the United Kingdom is 599, 682, 307 and 100, respectively.

Miss Vickers: While thanking my right hon. Friend for that reply, may I ask him if he will do all he can to encourage more women students who are able to come here, because it is essential that we should have a measure of equality between the two sexes in the Territories?

Dr. Summerskill: As the overwhelming need in Africa is for teachers, does not the Minister think it would be in the interests of good administration and social progress to increase the number of women teachers?

Mr. Lennox-Boyd: Certainly, Sir.

Oral Answers to Questions — BRITISH CAMEROONS

Future

Mr. Brockway: asked the Secretary of State for the Colonies what opportunity the peoples of Northern and Southern Cameroons will be given before the recognition of the independence of Nigeria to decide freely whether they wish to continue their federation with Nigeria or to unite with the French Cameroons as an independent State.

Mr. Lennox-Boyd: As I informed last year's Nigeria Conference, the Trustee-

ship Agreement for the British Cameroons will need to be reviewed when Nigeria becomes independent. Before then the people of the North and South sectors of the British Cameroons will have to express freely their wishes as to their own future. The manner in which this is to be done will have to be decided in consultation with the United Nations.

Mr. Brockway: Can the right hon. Gentleman say when this discussion with the United Nations is likely to take place, since the time factor is not very long?

Mr. Lennox-Boyd: I am afraid I cannot say at this stage, but I will keep the House informed.

Oral Answers to Questions — NORTHERN RHODESIA

High Court, Lusaka

Mrs. Castle: asked the Secretary of State for the Colonies why the new High Court at Lusaka, Northern Rhodesia, has separate rooms for African and European witnesses.

Mr. Lennox-Boyd: I am in touch with the Governor about this.

Mrs. Castle: Does not the Colonial Secretary agree that there is no difference in principle between a case like that and the case of the South African courts where there are separate entrances for coloured and non-coloured, and separate public galleries? Will he take it from me that I have seen this High Court at Lusaka? Does he not agree that it is shocking to have apartheid in a British Protectorate?

Mr. Lennox-Boyd: I think I had better wait until I hear from the acting Governor, but my views on distinctions based on colour are well known, as are also my views on the need for Governments to set a good example in this matter.

Racial Relations Committees

Mrs. Castle: asked the Secretary of State for the Colonies why the Lusaka Racial Relations Committee, set up under the Northern Rhodesian Race Relations (Advisory and Conciliation) Ordinance, 1957, has decided to hold its meetings in camera.

Mr. Lennox-Boyd: I understand that the Committee felt that to do otherwise would stifle outspokenness and might well deter some complainants from coming forward if they thought that by doing so they would attract unwanted publicity.

Mrs. Castle: Does not the Colonial Secretary agree that it is at any rate important that the results of the discussions should be announced in public? Whereas there might be a case for the examination initially to take place in private, will he give an assurance that the findings of the Committee will be made public?

Mr. Lennox-Boyd: There is a Question down about the findings. I think it is essentially a matter to leave to these committees on which, as the hon. Lady well knows, there is strong African representation.

Mrs. Castle: asked the Secretary of State for the Colonies what steps have been taken by the Board and District Racial Relations Committees set up under the Northern Rhodesian Race Relations (Advisory and Conciliation) Ordinance, 1957, to end racial discrimination in the Territory.

Mr. Lennox-Boyd: I am placing in the Library of the House two advance copies of the first annual Report of the Central Committee, which was tabled in the Northern Rhodesia Legislative Council on 1st April. The Report covers also the activities of the district committees. It indicates what is being done to promote better race relations in a number of ways, including the study of African languages by European children, the encouragement of inter-racial sports, the removal of racial barriers in shops and hotels and co-operation with various bodies, including school authorities, business interests and voluntary organisations.

Mrs. Castle: While thanking the Colonial Secretary for that reply, may I ask him whether he is satisfied that the powers of this Committee are adequate? Could he say, for instance, how they compare with the decree passed in the Belgian Congo last year, which makes it a punishable offence to show racial or ethnic aversion, or to encourage it in any way? Would he not consider introducing a similar decree in this Protectorate?

Mr. Lennox-Boyd: I think that the Northern Rhodesian Government and authorities deserve the greatest credit for having introduced the arrangements that are now in force, but I will certainly have a look at the Congo proposals.

Constitution

Mr. Wall: asked the Secretary of State for the Colonies whether he has considered the proposals affecting the constitution and the franchise recently made by the Government of Northern Rhodesia; and if he will make a statement.

Mr. Lennox-Boyd: I have naturally studied the proposals closely and with great interest; but, as hon. Members will know, the Northern Rhodesian Government have published them for public discussion. They have not yet made recommendations to me.

Mr. Wall: Can my right hon. Friend say when the House will be able to debate the proposals?

Mr. Lennox-Boyd: In this House?

Mr. Wall: Yes, in this House.

Mr. Lennox-Boyd: I shall have to look into that.

Mr. J. Johnson: Is it not a fact that these proposals which were made by Sir Arthur Benson are much too complex for Europeans to understand, never mind Africans?

Mr. Lennox-Boyd: I do not think so. Without claiming any particular merit, I took them in quite easily.

Kasikisi Township (Demonstration)

Mr. Pargiter: asked the Secretary of State for the Colonies what were the reasons for the hostile demonstration against the Government African surveyor during the course of his surveying the proposed Kasikisi township on the shores of Lake Mweru in the new Luapula Province on 22nd February in Northern Rhodesia; and what steps have been taken by the Government of Rhodesia to prevent further outbreaks of hostility.

Mr. Lennox-Boyd: The demonstration was inspired by persons trying to undermine the position of the Native Authorities and Chiefs, and to impede the


Government plan, in which the Native Authorities and Chiefs are fully co-operating, to develop the Luapula Province for the very obvious benefit of the local African population. Police reinforcements were moved into the area and officers of the Provincial Administration and the Native Authorities have taken steps to make Government policies even more fully understood locally. The situation is now normal.

Mr. Pargiter: Is the right hon. Gentleman not aware that no African was consulted in the planning of the new townships? They were merely presented with the plans afterwards, and is not their resentment rather natural?

Mr. Lennox-Boyd: I do not think that is so. The Native Authorities and Chiefs have co-operated in this matter, as I have said.

Incident, Ndola

Mr. Stonehouse: asked the Secretary of State for the Colonies under what circumstances the police opened fire with automatic rifles on a crowd of 5,000 Africans in Ndola, Northern Rhodesia, on 10th April; how many casualties resulted; and on whose authority this order was given.

Mr. Lennox-Boyd: The incident occurred following demonstrations, ostensibly against a recent raising of hut rents, most of which are payable by employers. A crowd of about 2,000 Africans refused to disperse when called upon to do so. Baton charges and tear smoke had no effect. Finally the crowd advanced in a very ugly mood, stoning the police heavily and inflicting damage on police vehicles. The police opened fire with two automatic rifles—firing one round at a time. When the crowd dispersed, three men were found to have been wounded and three more were admitted to hospital subsequently with gun-shot wounds. The order to fire was given by the Superintendent commanding the Ndola District Police after consultation with the District Commissioner on the spot. The situation has since remained quiet.

Mr. Stonehouse: Is it not a reflection on the Administration in Northern Rhodesia that on the Order Paper today are questions relating to two separate incidents involving the issue of protests? Is

it not regrettable that when these people protest against increases in rents the police should fire upon them?

Mr. Lennox-Boyd: I hope that the hon. Gentleman, having read my answer, will be more generous and accurate in his references to the Northern Rhodesian Government.

Agriculture

Mr. Pargiter: asked the Secretary of State for the Colonies what is the average weekly wage paid to agricultural workers in the rural areas of Northern Rhodesia; what is the number of Africans working at subsistence farming; and what steps are being taken by the Government of Northern Rhodesia to encourage cooperative or other forms of remunerative agricultural schemes to provide unemployed copper miners with opportunities to earn a living wage for their families.

Mr. Lennox-Boyd: As the reply is rather long, I will, with permission, circulate it in the OFFICIAL REPORT.

Following is the reply:
The latest figures available for December, 1956, show that more than three-quarters of African farm labourers were paid the equivalent of 15s. to 22s. a week exclusive of housing and food. As I stated in my reply on 16th July, 1957, to the hon. Member for Dartford (Mr. Sydney Irving), the number of Africans, including women, farming at a subsistence level is approximately 414,000. African farmers receive capital assistance through the African Farming Improvement Scheme and the Peasant Farming Scheme: the former encourages improved farmers, many of whom employ labour, while the latter provides capital for the establishment of small scale farmers. I am consulting the Government of Northern Rhodesia about that part of the question which concerns redundant African mineworkers and will write to the hon. Member.

Oral Answers to Questions — SOMALILAND

Development Programme (Expenditure)

Mr. J. Johnson: asked the Secretary of State for the Colonies what was the expenditure aimed at in the expanded development programme, 1956 to 1960, for the Somaliland Protectorate; how much of this has been spent to date; and whether he is satisfied with the progress so far achieved.

Mr. Lennox-Boyd: The expenditure aimed at was £2,470,000; of this a total


amount of about £720,000 has been spent to date. The current development plan took some little time to get under way, but great strides have been made in the current financial year. This pattern was expected in a Territory lacking in natural resources and in the required materials and men. I am satisfied that there has been no unreasonable delay.

Mr. Johnson: Is the right hon. Gentleman aware that the Somalis themselves are not satisfied with this programme and feel that they are lagging behind the Somalis to the south in the Italian territories? Is he further aware of the stoning of the hon. Members for Edmonton (Mr. Albu) and Essex, South-East (Mr. Braine)? Would it not be a good thing to fix a target date for independence so that these Somalis can work towards their future as well as can those in Mogadishu?

Mr. Lennox-Boyd: That is quite another question. The Question on the Order Paper deals with development, which I have tried to answer.

Constitutional Commission (Report)

Mr. Braine: asked the Secretary of State for the Colonies when the Constitutional Commission now at work in the Somaliland Protectorate will report.

Mr. Lennox-Boyd: The Governor has told me that he hopes that the Commission will be able to report to him within approximately two months.

Mr. Braine: Can my right hon. Friend say whether the work of the Commission has been delayed and, if there has been a delay, would he consider at least two reasons for making an entirely new approach to the whole question; the first being the impossibility of holding elections, as we understand them here, in a country where half the population spends half the year outside, in Ethiopia; and the second, the impending changes in Somalia, for which the Somalis cannot be——

Mr. Speaker: Order. That supplementary question seems to me to go much beyond the Question on the Order Paper. The hon. Member only asked for an approximate date.

Mr. Braine: With respect, Mr. Speaker, as my right hon. Friend well

knows, these questions are relevant to the Question on the Order Paper.

Mr. Speaker: I am afraid I am the judge of that and that the hon. Member must accept my decision.

Oral Answers to Questions — TANGANYIKA

Cattle Thefts

Mr. Page: asked the Secretary of State for the Colonies whether he is satisfied that sufficient police protection is provided against cattle theft in the Northern Province of Tanganyika, and that effective action is taken to apprehend the thieves; and if he will make a statement.

Mr. Lennox-Boyd: I am satisfied that the Tanganyika Government are taking all available measures to safeguard the stock of farmers of all races in the Northern Province, having regard to police commitments elsewhere in the Territory and the very large area to be covered.

Mr. Page: Is it not a fact that, normally, the stolen cattle can be traced to some tribal area or another, but that, according to our concepts of the law, it is extremely difficult to prove the guilt of the thief? Would recognition of some tribal compulsory compensation be acceptable to responsible tribal leaders?

Mr. Lennox-Boyd: I will put that suggestion to the Governor.

African Labourers

Mr. Page: asked the Secretary of State for the Colonies what action he has taken upon the communication received by him in March, 1958, from the Tanganyika National Farmers' Union concerning desertions by African labourers, who desert after receiving many free benefits in food, housing, blankets, medical attention, etc., and recoupment of transport costs.

Mr. Lennox-Boyd: I am at present considering this communication in the light of the Governor's comments, which I have just received.

Mr. Page: Is it not a fact that a great amount of effort and money are spent in encouraging African labourers to take up agricultural employment like this but that


very many of them take the benefits and then never even start the employment? Could not some law such as that applying in Kenya be applied in Tanganyika?

Mr. Lennox-Boyd: I will take the earliest possible steps to acquaint the House of my conclusions following consideration of the Governor's comments.

Plantation Workers

Mr. Prentice: asked the Secretary of State for the Colonies what replies have been sent by the Tanganyika Sisal Owners' Association to the demands of the newly-formed National Union of Plantation Workers in Tanganyika for recognition of the union and various measures for the improvement of wages, working conditions, and housing; and whether this union is represented on the Consultative Labour Council of the Central Line Sisal Estates Limited.

Mr. Lennox-Boyd: The National Union of Plantation Workers, which to the best of my knowledge has submitted no formal proposals to the Tanganyika Sisal Growers' Association, has not yet applied for registration as a trade union and cannot, therefore, be offered formal recognition on the Consultative Labour Council of the Central Line Estates Limited.

Mr. Prentice: Has the attention of the Secretary of State been drawn to the meeting on 21st February between the existing unions, when it was decided that they would form themselves into a national union which, according to reports, would ask the Sisal Growers' Association for recognition and representation on the Consultative Labour Council? Will the right hon. Gentleman use his influence to encourage that recognition in order to promote good labour relations?

Mr. Lennox-Boyd: I understand that negotiations on such a proposal are now taking place between the Tanganyika Sisal Growers' Association and the Federation of Labour, and that there is the possibility that a Union of Sisal Workers, possibly affiliated to a National Union of Plantation Workers, may be recognised; but no final decision has yet been reached.

United Nations Delegation (Report)

Miss Vickers: asked the Secretary of State for the Colonies if he will now make a further statement on the policy of Her Majesty's Government in regard to the Report of the United Nations Delegation to Tanganyika in 1957.

Mr. Lennox-Boyd: Her Majesty's Government's policy in regard to this Report has been set out in its observations as Administering Authority for Tanganyika; a copy is in the Library of the House. The Trusteeship Council has now completed its consideration of the Report with our observations. The Council adopted a number of resolutions, nearly all of which were acceptable to the United Kingdom Delegation. The official text of these Resolutions is not yet available but, when it is, I will put a copy in the Library of the House.

Oral Answers to Questions — GAMBIA

Constitution

Mr. J. Johnson: asked the Secretary of State for the Colonies what are the main political parties with whom the Governor of the Gambia is having informal discussions regarding further constitutional advance in that Colony; and what steps he is taking to see that the Gambian people, particularly those in the Protectorate, are aware of any proposals that may eventually be submitted to Her Majesty's Government and will have full facilities for discussion of these proposals.

Mr. Lennox-Boyd: The Governor has invited the leaders of the Muslim Congress, the United and the Democratic Parties to meet him for informal discussions on their proposals for constitutional change. So far, only the Muslim Congress Party has accepted the invitation. The stage for the submission to me of formal proposals has not been reached, but the hon. Member can be certain that the Gambian people, including those in the Protectorate, through their representatives, will be given all proper facilities for discussion.

Mr. Johnson: Would not the Colonial Secretary agree that the Gambians should follow the course of Sierra Leone and soon move into a state whereby the Executive Council becomes a Cabinet,


with some elected members at least being Ministers without Portfolio, and gaining apprenticeship in political life?

Mr. Lennox-Boyd: One of the lessons I have certainly learnt in the last four years is the danger of assuming that the problems of one territory are exactly the same as those in another.

Oral Answers to Questions — NYASALAND

Constitution

Mr. J. Johnson: asked the Secretary of State for the Colonies if he will make a statement upon the discussions that have taken place between the Governor of Nyasaland and various groups in that Protectorate regarding future constitutional advance; and what organisations have been consulted.

Mr. Lennox-Boyd: The Governor of Nyasaland has had preliminary discussions with representatives of the Nyasaland African Congress, the Asian community, the Euro-African and Coloured Community Welfare Associations and the African Progressive Association. The representatives of the European community have not yet submitted any proposals to the Governor. When he has received their proposals he will be able to consider the question of further discussions. I cannot say anything further at this stage.

Mr. Johnson: Is the Colonial Secretary aware that the last settlement, whereby he gave six seats to Europeans and five to Africans in a society of over 2 million Africans and some 5,000 Europeans, caused intense dissatisfaction in the Protectorate, and will he see next time that he has a much more liberal constitution, particularly in view of the fact that a delegation will come to the 1960 Conference on behalf of that Protectorate?

Mr. Lennox-Boyd: I think the hon. Gentleman knows that when the present constitution was introduced it was assumed that it would last until 1960 unless there was agreement to alternative proposals, but, as I have said, the Governor will be further considering this matter.

Oral Answers to Questions — ADEN

Secondary Education

Mr. Braine: asked the Secretary of State for the Colonies what steps are being taken to expand the existing facilities for secondary education in Aden Colony and Protectorate.

Mr. Lennox-Boyd: The construction of a girls' college and an extension of the Technical Institute in the Colony are almost completed, and plans are being prepared for building additional boarding accommodation for Protectorate students attending schools in the Colony. Future needs are being studied by the Aden Government's Adenese Training Committee. Plans for a junior secondary school in the Western Aden Protectorate are being prepared.

Mr. Braine: Is my right hon. Friend aware that this Answer will give very great satisfaction, especially in view of the anxiety expressed by the hon. Member for Edmonton (Mr. Albu) and myself while on the spot, that existing facilities were not equal to the need? Can he say whether any scholarships have been made available in this country out of C.D and W. funds?

Mr. Lennox-Boyd: Yes, eight scholars are receiving secondary education and eleven receiving technical education scholarships from C.D. and W. funds.

Mr. J. Johnson: Can the right hon. Gentleman explain why the hon. Member for Essex, South-East (Mr. Braine) was stoned when in the Somaliland Protectorate?

Mr. Speaker: I do not think the Minister was stoning him.

Oral Answers to Questions — BAHAMAS

Co-operative Societies

Mr. Beswick: asked the Secretary of State for the Colonies (1) under what legislation a co-operative society can be registered in the Bahamas;
(2) how many co-operative societies are now functioning in the Bahamas.

Mr. Owen: asked the Secretary of State for the Colonies what legislation exists in the Bahamas to encourage the growth of co-operative societies.

Mr. Lennox-Boyd: There are no cooperative societies in the Bahamas and no specific legislation designed to encourage their growth. If a co-operative society wishes to register as a company, it may do so under the Companies Act, chapter 124 of the Revised Laws.

Mr. Beswick: Does the Colonial Secretary consider that position satisfactory? Is there not a great need in the Bahamas for a co-operative society, and does not the recent trouble there show that we ought to assist these people to help themselves; and it is impossible to support a co-operative movement unless there is some protective legislation?

Mr. Lennox-Boyd: I hope that my visit has been of some assistance in helping people to help themselves. This was not one of the subjects under discussion, but I will certainly take it up with the Governor.

Mr. Owen: Does not the Minister recognise the importance of encouraging the development of co-operative effort in Colonies such as this and to pave the way by providing them with the guidance of a co-operative ordinance, such as I learn his predecessor considered a possibility?

Mr. Lennox-Boyd: In general, I agree with that, and there is a general Question on that subject later on the Order Paper.

Oral Answers to Questions — NIGERIA

Wages

Mr. E. L. Mallalieu: asked the Secretary of State for the Colonies what reply has been sent by the Government of Nigeria to the request of the All-Nigerian Trade Union Federation to summon a meeting between the employers of labour and trade unions to negotiate a national wage structure for the whole Federation.

Mr. Lennox-Boyd: I understand that the Federal Government have not received such a request.

Mr. Mallalieu: Even if he has not received such a request, could not the Colonial Secretary agree that steps should be taken by the Government, having regard to the fact that the income per head in Nigeria is only £22 per annum? Does not that show that the national "cake" should be properly divided out, and would not steps of this nature be appropriate?

Mr. Lennox-Boyd: I have answered the Question. The population of Nigeria is 32 million, and the country is equal in size to Great Britain and France put together, with many varying standards of living, and I do not think that the suggestion made is appropriate at the moment.

Oral Answers to Questions — COLONIAL TERRITORIES

Co-operative Societies

Mr. Owen: asked the Secretary of State for the Colonies how many Colonies have not got a co-operative ordinance: and whether he will make a statement.

Mr. Lennox-Boyd: Nine territories have not got a co-operative ordinance or other legislation. In one of these an ordinance is at present in draft. In the majority of the Colonial Territories there is now legislation based generally on the model Co-operative Societies Ordinance circulated by one of my predecessors in 1946. In one or two instances the legislation in force departs somewhat from this model. Whilst I attach much importance to the development of cooperative societies in the Colonial Territories, the hon. Member will realise that the question whether any legislation is needed or the form of it are matters for individual Colonial Governments to decide.

Mr. Owen: Surely the Secretary of State realises that in order that co-operative efforts may be developed in the Colonies it is essential that there should be some legal guidance and protection? Is the right hon. Gentleman aware that, in many of these Colonies, such protection has been secured from a co-operative ordinance? In so far as it is now recognised that there are many Colonies without this guidance, will the right hon. Gentleman reconsider the matter and see whether it is possible to provide it?

Mr. Lennox-Boyd: I certainly will. I should like to have a talk with the hon. Member about this.

Oral Answers to Questions — BERMUDA

General Election (Voters)

Mr. K. Robinson: asked the Secretary of State for the Colonies how many persons have been registered as entitled


to vote in the Bermuda General Election; and what proportion of the adult population the figure represents.

Mr. Lennox-Boyd: The number is 5,675, which represents 23·76 per cent. of the adult population of the Colony. I am sorry for the discrepancy between this figure and the figure given by my hon. Friend the Parliamentary Under-Secretary of State in reply to the hon. Member's Question on 27th February that 6,048 persons were registered on 22nd February. The latter figure did not take account of the fact that a number of persons are entitled, under local legislation, to more than one vote.

Mr. Robinson: Does the right hon. Gentleman not agree that a property qualification which disfranchises about three-quarters of the adult population is hardly in keeping with modern Commonwealth thinking? Does not the right hon. Gentleman's experience in the Bahamas suggest that there may be a case for introducing constitutional reform in advance of trouble breaking out?

Mr. Lennox-Boyd: This is a matter for Bermuda. I know of no widespread demand in Bermuda for a change in the franchise qualifications.

Oral Answers to Questions — CYPRUS

Casualties

Mr. Wall: asked the Secretary of State for the Colonies how many British Service men and civilians and Cypriot Service men and civilians have been killed in Cyprus since 1st January, 1958.

Mr. Lennox-Boyd: Eleven Cypriot civilians. No British Service men, police or civilians and no Cypriot Service men or police have been killed.

Mr. Wall: Do these figures represent an improvement on the past two years? Could my right hon. Friend say how many of the woundings were caused by right-wing Greek-speaking Cypriots against left-wing Greek-speaking Cypriots and vice versa?

Mr. Lennox-Boyd: The situation has undoubtedly deteriorated in the last few weeks. Four of those killed were Greek

Cypriot civilians who were shot by other Greek Cypriots, and over the whole period of the trouble 265 people have been killed, of whom 142 were Greek Cypriots killed by other Greek Cypriots.

Mr. Callaghan: Whilst we are glad to learn the Colonial Secretary acknowledges that the situation is deteriorating in Cyprus—[HON. MEMBERS: "Why?"] We are glad to have his acknowledgment of it. As the Colonial Secretary will know, we have been telling him this for some time. May we be told by the Colonial Secretary what is the Government's policy that will make it possible to bring to an end the state of emergency and to encourage constitutional development in this island, and when can we expect it to be implemented?

Mr. Lennox-Boyd: As I have already told the hon. Member, as soon as I can make a profitable statement I will gladly do so.

Financial Assistance

Mr. Wall: asked the Secretary of State for the Colonies what has been the amount of financial help Britain has given the Cyprus Government towards the cost of the emergency and towards the cost of development, respectively, in 1956, 1957 and 1958.

Mr. Lennox-Boyd: As the reply contains figures in tabular form, I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Wall: Will my right hon. Friend agree that development in Cyprus is extremely important and that an adequate amount is required for this purpose?

Mr. Lennox-Boyd: It certainly would be available, but the situation on the island has not allowed its deployment.

Mr. Callaghan: In view of the heavy financial burden on the taxpayer, may I ask in what circumstances the Colonial Secretary will be able to make a statement on policy which will bring the situation to an end?

Mr. Lennox-Boyd: I am in no better position to answer that question than I was half a minute ago.

Following are the figures:


—
*U.K. Grant in aid towards the cost of the Emergency
†Grants issued from Colonial Development and Welfare Funds




£
£


1955–56
…
Nil
148,396


1956–57
…
2,405,000
Nil (over-issue of £2,194 reimbursed by the Cyprus Government to H.M.G.)


1957–58
…
7,295,000
55,056


* The U.K. contribution towards the cost of the Emergency in any financial year is not the same as the reimbursable Emergency expenditure incurred during that year. Expenditure incurred in one year by the Armed Forces is often not claimed until the following financial year.


† The Cyprus Government's regional allocation from Colonial Development and Welfare Funds for the period 1956–60 is £500,000.

Oral Answers to Questions — KENYA

Kiambu District (Labour Schemes)

Mr. Stonehouse: asked the Secretary of State for the Colonies what protests have been received against the compulsory labour schemes in the Kiambu district of Kenya.

Mr. Lennox-Boyd: I have received no protests, but I am asking the Governor of Kenya for information about any made locally and will circulate a further reply in the OFFICIAL REPORT.

Mr. Stonehouse: Is the right hon. Gentleman aware that many hon. Members on this side of the House have received protests against the use of compulsory labour involving over 30,000 men in Kiambu, and when the right hon. Gentleman receives information about this, will he ensure that this compulsory labour is not used in contravention of the International Labour Convention?

Mr. Lennox-Boyd: It is not in contravention. It has got nothing to do with the emergency. It is a historical practice in Kenya for communal work of this kind to be requested.

Oral Answers to Questions — JUDICATURE ACT AND RULES OF COURT (COUNCIL)

Mr. E. Fletcher: asked the Attorney-General (1) when the Council of Judges last met to consider the operation of the Judicature Act and the Rules of Court; and what recommendations were made;
(2) what steps are being taken to bring about a complete revision of the Rules of Court as recommended by the Evershed Committee in 1951.

The Solicitor-General (Sir Harry Hylton-Foster): The last meeting to consider the operation of the Judicature Act and Rules of Court was held on 9th April, 1952, when the Council recommended the resumption of the practice of observing the Sovereign's Birthday. Arrangements have been made, with the approval of the Supreme Court Rule Committee, for the revision of the Rules to be undertaken in the Consolidation Branch of the Office of Parliamentary Counsel, and this work is now in progress.

Mr. Fletcher: Does the Solicitor-General therefore agree that the present practice and procedure of the Supreme Court are laid down in an unnecessarily complex form? May we take it that everything will be done to reduce them to greater simplicity and brevity at an early date?

The Solicitor-General: Yes, Sir. The most highly skilled persons possible are employed on that formidable task.

Oral Answers to Questions — MINISTRY OF WORKS

Cast-Iron Baths

Mr. Barter: asked the Minister of Works what was the output of cast-iron baths in the United Kingdom in 1957; to what extent this was sufficient to meet the home and export demand; and to what extent it is anticipated that United Kingdom manufacturing capacity will exceed demand during the current year.

The Minister of Works (Mr. Hugh Molson): I regret that figures of output of cast-iron baths are no longer collected so that I cannot answer the first or last


parts of this Question. I am satisfied, however, that present capacity is sufficient to meet both home and export demand.

Mr. Barter: Will my right hon. Friend bear in mind that there is a surplus of capacity in the British bath manufacturing industry, and will he call the attention of his right hon. Friend the President of the Board of Trade to this fact so that he also is aware of the circumstances in which the Socialist-controlled Barking Borough Council can specify baths of Hungarian manufacture, thus creating an embargo on the products of British workmen?

Mr. Molson: I have no reason to suppose that this small importation of Hungarian baths under a payments agreement is having any adverse effect upon the large British production.

Mr. Hastings: Is the right hon. Gentleman aware that great trouble was taken by the Barking Borough Council to obtain what it wanted, and that, because it was unsuccessful in getting British goods, it had to go abroad for them?

Mr. Molson: I was not aware of that, but I am extremely glad to know that the Barking Borough Council obtained what it wanted. I have no doubt, however, that very satisfactory baths are also produced by the British industry.

Dame Florence Horsbrugh: Can my right hon. Friend suggest in what way it is thought that a Hungarian bath is better than a British bath?

Hon. Members: Answer.

Mr. Albu: Is it not a fact that there are price-fixing arrangements in the bath-making industry of this country?

Palace of Westminster (Members' Lift)

Dr. King: asked the Minister of Works if he will provide a morning lift man again for the lift from the Library Lobby to the Committee and Upper Committee Lobbies.

The Parliamentary Secretary to the Ministry of Works (Mr. Harmar Nicholls): My right hon. Friend is proposing, for a trial period, to change the shift of the attendant on the Members' Lift, and in future he will be on duty from 10 a.m. to 7 p.m.

Dr. King: May I thank the Minister, on behalf of the two dozen hon. Members and officials who use the rooms on the Upper Committee Corridor, and may I ask him whether he can assure us that the disabled ex-Service men who manned this lift have been given adequate employment elsewhere?

Mr. Nicholls: There has been no question at all of interfering with their employment. They will be employed at other points, except for one, who resigned voluntarily.

Mr. Beswick: Does not the hon. Gentleman think that this is another case in which one small administrative economy has led to a large loss of efficiency and dignity in the working of this House, and, for example, could we not have a lift man on the lift which takes up distinguished strangers?

Mr. Nicholls: I do not think there is any basis for that sort of comment. We are trying hard to make these changes to fit the convenience of hon. Members, and I think we are succeeding.

Oral Answers to Questions — SCOTLAND

North American Trade

Mr. Hector Hughes: asked the Secretary of State for Scotland if he is aware of the opportunities existing in Canada and the United States of America for the sale of the products of Scottish trade and industry; and what steps he has taken, and through what agencies or bodies, during the last twelve months, to publicise and encourage the expansion of trade between those countries and Scotland.

The Secretary of State for Scotland (Mr. John Maclay): I am fully aware of the importance of promoting trade between Scotland and North America. I am in constant touch with my right hon. Friend the President of the Board of Trade, who has the primary responsibility in this matter, and also with the Scottish Council (Development and Industry) and the Council of the Scottish Chambers of Commerce, who are all, as the hon. and learned Member knows, very active in this field.

Mr. Hughes: Is the Secretary of State aware of the exhibition of the Aberdeen fisheries which is now being held under the auspices of the Scottish Council in London, and would he take steps to have similar exhibitions in other capitals so that trade may be encouraged?

Mr. Maclay: I am always prepared to listen to any suggestions and to pass them on to those primarily responsible for holding the exhibition, and this sounds a good suggestion.

Rent Act, 1957

Mr. Hector Hughes: asked the Secretary of State for Scotland if he has yet ascertained how many tenants of houses in Aberdeen are affected by the Rent Act, 1957; and how many are likely to be evicted from their homes.

Mr. Maclay: As the landlords and tenants of the 400 let houses in the City which will be decontrolled under the Act have until October to negotiate new leases, it is not possible to say at this stage how many tenants are likely to be required to remove.

Mr. Hughes: Does the Secretary of State realise that this is a matter affecting the life, health and happiness of many people? Will he take steps to ensure that such an inquiry is instituted in time to see that these people are properly cared for?

Mr. Maclay: If the hon. and learned Gentleman will study my original reply, I think that he will see that it is not possible to tell, because there is plenty of time for agreement to be reached.

Mentally Defective Patients

Mr. Hector Hughes: asked the Secretary of State for Scotland how many mentally defective patients there are detained in Scotland under his authority; where they are; and what steps are being taken by him to ensure that the condition of each is periodically reviewed with a view to release.

Mr. Maclay: Mentally defective patients are not detained under my authority, but on the initiative of the parents or of the local authority with the parents' consent, or by order of the Sheriff. At the end of 1957, there were 5,649 patients on

the registers of mental deficiency institutions and 2,551 patients under guardianship. The General Board of Control are required by statute to review the need for detention at prescribed intervals.

Mr. Hughes: Does the Secretary of State realise that this is a very important and far-reaching matter, and that many of these people who are detained believe, with their relatives, that they are fit for freedom? Will he take steps to ensure that they are properly examined so that they can obtain their freedom if they are fit for it?

Mr. Maclay: There are the most careful provisions for watching to ensure that anybody who should be released is released. I should be very glad to tell the hon. and learned Member more about this either in a letter or if he cares to see me.

Nursery Schools

Mr. G. M. Thomson: asked the Secretary of State for Scotland whether he has considered the report from the Scottish Council for Research in Education on the inadequacy of nursery school provision in Scotland; and if he will make a statement on the Government's intentions in this field.

Mr. Maclay: I have read this Report with interest. I regret that I see no prospect of any relaxation in the restrictions on the provision of new nursery schools which have been in force since 1948. All available building resources and staff are still needed for primary and secondary schools and technical education centres.

Mr. Thomson: Is the Secretary of State aware that the Report shows that more than two-thirds of the Scottish education authorities make no nursery school provision at all? Does not the most effective way to get into a nursery school appear to be either to have problem parents or very well-to-do parents? Will not the right hon. Gentleman at least look into the possibility of using existing accommodation and converting it for nursery school purposes?

Mr. Maclay: I am aware of the very valuable part which nursery schools can play, but there is a problem of priorities in this. I will continue to watch the position as closely as I can.

Youth Service

Mr. G. M. Thomson: asked the Secretary of State for Scotland what steps he is taking to expand the youth service provisions in Scotland to meet the needs of the increasing numbers of young people in the teen-age groups.

Mr. Maclay: So far as available resources will allow, I will continue to give assistance to education authorities on whom rests the statutory responsibility for the youth service, and to the voluntary organisations which play so important a part in this work.

Mr. Thomson: Will the Secretary of State circulate the local authorities of Scotland, drawing to their attention the teen-age bulge which is now arising in the various youth service departments, and ask them to increase their provision in the way of youth clubs and other community centres?

Mr. Maclay: I should want to think over that proposal rather carefully.

Farming Land, Ayrshire

Mr. Emrys Hughes: asked the Secretary of State for Scotland if he is aware of the concern recently expressed by the Ayrshire Branch of the National Farmers' Union over the action of the Ayrshire landlord in taking over the land of a farmer in Ayrshire without giving reasonable notice; and what administrative steps he intends taking to prevent landlords taking over good agricultural land improved by the tenant and using it for purposes which will not increase food production.

Mr. Maclay: I have seen Press reports about the matter referred to in the first part of the Question. With regard to the second part of the Question, resumption is a matter between landlord and tenant and is governed by the terms of the lease of the farm and the provisions of the Agricultural Holdings (Scotland) Act,1949.

Mr. Hughes: Does not the Secretary of State agree that it is unfortunate that good agricultural land, on which much labour has been expended, should be taken away for the planting of trees, and is it not very unfortunate that the landlord happens to be a member of Her Majesty's Government?

Mr. Maclay: These matters are governed by the conditions of lease. On the specific case to which the hon. Gentleman refers, the matter has been before the court, and I do not think that it would be proper for me to comment on it.

Oral Answers to Questions — TRADE AND COMMERCE

Oil Refinery, Fareham

Dr. King: asked the President of the Board of Trade what request he has received for the granting of a development certificate for the purpose of setting up a second oil refinery in Southern Hampshire; and what action he intends to take.

The Parliamentary Secretary to the Board of Trade (Mr. F. J. Erroll): I assume that the hon. Member is referring to the application of the Regent Oil Company for an industrial development certificate to erect an oil refinery in the Urban District of Fareham, which was granted on 7th September, 1956. The hon. Member may wish to refer to the full statement on the subject made on behalf of Her Majesty's Government in another place on 25th October, 1956.

Dr. King: Will the Minister bear in mind that Hampshire is a rapidly expanding county, that its main need is industrial work for the increasing population, and that the Esso refinery has been a tremendous boon to Hampshire as well as to Britain? Will he do what his predecessors did, namely, take active steps to encourage the setting up of a second oil refinery in Hampshire?

Mr. Erroll: Steps have been taken by the granting of the industrial development certificate, which is, of course, still valid.

Oral Answers to Questions — SERVICE DEPARTMENTS (SURPLUS STOCKS)

. Mr. Shinwell: asked the Prime Minister whether he will cause an inquiry to be made into the stocks in the possession of the Service Departments which are regarded as surplus to requirements; how far those stocks are made available to the Ministry of Supply; and why they are not readily disposed of.

The Prime Minister (Mr. Harold Macmillan): Holdings of equipment which are surplus to Service requirements are first offered to other Departments likely to be interested and the balance is then disposed of as rapidly as is consistent with the best return to public funds. The Ministry of Supply is the agent for the disposal of all War Office and certain Admiralty and Air Ministry surpluses in the United Kingdom. The Service Departments carry out their own disposals overseas.

Mr. Shinwell: Will not the right hon. Gentleman agree that it is desirable that hon. Members should be informed about the quantity of stocks in the possession of the Service Departments? We are very much in the dark about the matter. So far as we are aware, we seem very wealthy in the possession of stocks but very wasteful in the disposal of them.

The Prime Minister: The right hon. Gentleman's Question referred to the responsibility of the Departments. If he will put down a Question about how Parliament could be better informed, I will do my best to answer it.

Mr. Gaitskell: The Prime Minister's predecessor set up a Committee to look into the whole business of the disposal of surplus stocks, and am I not right in supposing that the right hon. Gentleman himself was in charge of that Committee? Has it reported? Could the Prime Minister make a statement about it?

The Prime Minister: Yes. The present working is based upon that. There is some part in which the Ministry of Supply has certain functions, and other Departments manage their own. On the whole, I think that it is working well.

Oral Answers to Questions — NUCLEAR TESTS

Mr. Zilliacus: asked the Prime Minister (1) what proposals he intends to submit to President Eisenhower, on his forthcoming visit to the United States of America, concerning the possibility of an agreement banning hydrogen bomb tests in advance of agreement on other aspects of disarmament, and the possible date, preparation, and agenda of a Summit Conference; and
(2) whether, in view of the accumulating evidence that radioactive materials

already released will damage future generations and produce leukaemia and bone cancer and of the Soviet renunciation of further hydrogen bomb tests, he will now cease British tests, and press for an agreement to banish tests with inspection posts, but not other conditions, pending agreement on other aspects of disarmament.

Mr. Emrys Hughes: asked the Prime Minister if he has considered the decision of the Supreme Soviet of the Soviet Union to discontinue hydrogen bomb tests; and if he will make a statement.

The Prime Minister: Her Majesty's Government have received a communication from the Soviet Government about nuclear tests to which I shall reply very shortly. Otherwise, I have nothing to add to what I told the House on 1st April. As regards summit talks, my discussions with President Eisenhower, when I see him in June, will depend on the situation at that time.

Mr. Zilliacus: Will the Prime Minister be good enough to draw to the attention of the President the fact that American scientists, such as Dr. Condon and Professor Leo Szilard, have reported recently that radioactive fall-out has already reached danger point and any more tests would be certain to cause agonising deaths to many thousands by leukaemia and bone cancer? Further, will he remind the President that the Soviet Government have offered control posts in connection with an agreement abolishing tests? Finally, will he give an assurance—[Interruption.]—I am following up two Questions—will the Prime Minister be good enough to give an assurance that the agenda will include nothing contrary to the Charter of the United Nations which forbids interference in the internal affairs of members of the United Nations, including East European members?

The Prime Minister: I think that I have heard the main parts of that supplementary question before. Unless it is a mistake of mine, perhaps I heard it on the Moscow radio.

Mr. Hughes: Is the Prime Minister aware that there is a steadily growing increase in public opinion in this country wanting to see these tests completely abolished? Is the right hon. Gentleman


acquainted with the fact that the Prime Minister of Japan, who has condemned both the Russian tests and the Western tests, now thinks that the time has come when the Western Governments should agree with the Russian proposal?

The Prime Minister: Yes, Sir; but, as I think the House as a whole feels, it is for that reason that I attach so much importance to making as rapidly as possible the arrangements which will lead to the summit meeting, where this whole question, including the question of control, can, in my opinion, best be dealt with.

Mr. Gaitskell: Will the Prime Minister then confirm that our ambassador in Moscow, together with the other Western ambassadors, will be attending a meeting on Thursday to discuss the Summit Conference?

The Prime Minister: The precise position at present is that a reply is being concerted between the three Powers to the last Soviet statement in answer to ours, and I hope that it will be delivered today or tomorrow.

Mr. Grimond: As there are a number of urgent questions which require joint action by the Western world, is there any possibility that the Prime Minister will be able to go to America sooner than he proposes and meet not only the President but other leaders of the Western world?

The Prime Minister: I think that the most important thing we have to do, as I think the House knows we are trying to do, is first to persuade the Russians, the Soviet Government, to agree to the preparatory plans for making all the proper arrangements so that summit talks may be successful. There will be necessary also, of course, as a continuing process, the preparation of the positions of the various Western Powers in order that they may speak with one voice.

Dr. Summerskill: Are we to understand that the Prime Minister does not agree that there is already a dangerous concentration of radioactive material in the Northern Hemisphere?

The Prime Minister: That is a point, of course, on which I have to follow my scientific advisers. For myself, I feel that this whole question can be satisfactorily

settled only by agreement between the Powers concerned. It is for that reason, I repeat, that I always thought that the matter could be settled best by the machinery we are now trying to bring into being.

Mr. Mason: asked the Prime Minister if he will state to what extent there has been an increase in atmospheric radiation over this country following the recent series of Russian nuclear tests; and to what extent there has been a noticeable increase of strontium 90 on the Welsh mountains, the Scottish Highlands and the Pennine Range.

Mr. Swingler: asked the Prime Minister to what extent radioactivity over Britain has increased as a result of the recent series of Russian nuclear tests; and what advice has been given to Her Majesty's Government on the subject.

The Prime Minister: There was a significant rise in short-term radioactivity in the upper atmosphere late in March which may have been produced by Russian tests. This short-term activity was not dangerous. The level of strontium 90 is monitored regularly and the results made available to the House from time to time. I would refer the House to the reply I gave to the hon. Member for Salford, East (Mr. Frank Allaun) on this subject on 25th February last.

Mr. Swingler: asked the Prime Minister what increase in radioactivity over Britain is expected as a result of the forthcoming series of British nuclear tests.

The Prime Minister: Tests of the type held by the United Kingdom do not contribute significantly to the level of atmospheric radioactivity in the United Kingdom or elsewhere.

Mr. Harold Davies: Absolute rubbish.

Mr. Swingler: Is the Prime Minister aware that it is very difficult for the public to reconcile statements such as the one he has just made with statements constantly reported from reputable physicists on both sides of the Atlantic about inevitable increases in the incidence of leukaemia and bone cancer arising from the accumulation of nuclear tests? Could we not rapidly have from the Government's scientific advisers some firm


information on what is the situation and whether he is right or whether Dr. Condon is right?

The Prime Minister: Perhaps one of the confusions may arise from the form of the hon. Gentleman's Question, but I answered it as it was put. This Question is about radioactivity.

Mr. Davies: Does the right hon. Gentleman not agree that, while there may be a lot of emotion on this question, the real truth is, whatever we may say on either side of the House, that no scientist knows what the threshold is in this matter? Secondly, will he not agree that the increase of 86 per cent. over 1938 in deaths from leukaemia needs an explanation, and will he therefore—I am asking this question with all sincerity—endeavour to give the people of Britain an accurate answer to this increase in deaths from leukaemia, not only in the Western world, but all over the world?

The Prime Minister: I understand the interest of the hon. Gentleman, the whole House and the country in this matter. I have always tried to answer these questions—of which there have been a great number—as accurately as possible, and I have taken a great deal of trouble to get the best advice I can. Question No. 56 is about the increase in radioactivity which might be likely to follow from any forthcoming series of British nuclear tests. First, the question of radioactivity is not connected with leukaemia, or any other disease, because it is not concerned with radioactivity as such. I have, therefore, answered the second Question, and the character, type and size of any further British tests are of such a kind that I am advised there would be a negligible increase in the total radiation.

Mr. S. Silverman: asked the Prime Minister whether, having regard to the new scientific evidence that has accumulated since the Medical Research Council published their report in June, 1956, and to the large number of megaton bombs exploded in various parts of the world since that date, he has any further statement to make concerning the hazards to man of nuclear radiation.

The Prime Minister: I would refer the hon. Member to the reply which I gave to the hon. Member for Newcastle-under-Lyme (Mr. Swingler) on 3rd April.

Mr. S. Silverman: Does the Prime Minister realise that when the Medical Research Council reported in 1956 it had experience of the explosions of only four megaton bombs? Up to today more than 50 megaton bombs have been exploded. Does he further realise that in 1956 the Medical Research Council gave a percentage which it regarded as dangerous and which had not then been reached? There is now very considerable scientific evidence to show that that percentage has since been exceeded. If there is now doubt about the scientific facts, will the right hon. Gentleman take steps to get the information up to date and to bring to an end this really damnable conspiracy of silence?

The Prime Minister: I shall try to answer that supplementary question as simply as I can. I am advised by the Medical Research Council that in its view no detectable increase in the incidence of leukaemia or bone cancer is to be expected from the nuclear explosions which have taken place up to now.

Oral Answers to Questions — CIVIL DEFENCE (EVACUATION)

Mr. Emrys Hughes: asked the Prime Minister which Minister is now responsible for evacuation in the event of war.

The Prime Minister: The Minister of Housing and Local Government is the Minister designated under the Civil Defence Act, 1948, as responsible for evacuation arrangements for the civil population in England and Wales. As the hon. Member was informed by my right hon. Friend the Lord Privy Seal on 19th March, the Home Secretary is responsible for co-ordinating the defence plans of all the civil agencies of government, including evacuation plans.

Mr. Hughes: Could the Prime Minister tell us who is really responsible for the problems of evacuating 12 million people? Does he think that the Minister of Housing and Local Government is capable of organising such a momentous operation?

The Prime Minister: My right hon. Friend has proved himself to be a very capable Minister. The hon. Gentleman must know very well that it is not an uncommon method in our system, where


a number of Departments are concerned, each Minister being responsible for his own part, to have another Minister, particularly a senior Minister, responsible for co-ordination.

Mr. Shinwell: Is it not too gigantic a task for the Minister of Housing and Local Government to make himself responsible not only for evacuation but also for eviction?

The Prime Minister: I thought that that supplementary question would be asked, but I was rather disappointed that it did not come from below the Gangway.

Commander Donaldson: Is my right hon. Friend aware that last year a special course was arranged at Sunningdale for hon. Members to see the effectiveness of civil defence but that only eight hon. Members from either side attended? Will he arrange for a similar course to be devised this spring so that hon. Members on both sides who are really interested in civil defence can avail thmselves of the information which is there afforded?

Oral Answers to Questions — EUROPEAN FREE TRADE AREA

Mr. Woodburn: asked the Prime Minister (1) what further steps the Government propose to take to speed up agreement on a European Free Trade Area; and
(2) whether he will propose a personal meeting with the French Prime Minister with a view to avoiding a deadlock on the negotiations for a European Free Trade Area.

The Prime Minister: At this stage further progress in the discussions must wait until the six members of the European Economic Community have made known their views, following their consideration of suggestions made to them by France. A paper setting out these views has been promised in time for the next meeting of the Ministerial Committee, which is under the chairmanship of my right hon. Friend the Paymaster-General, on 2nd May. If at any time my right hon. Friend the Paymaster- General thinks I could help speed negotiations by discussing matters personally with the Prime Minister of

France, or of any other country concerned, I should most gladly consider this.

Mr. Woodburn: Is the Prime Minister aware that there are informed circles who are convinced that the hard French attitude can be relaxed only if steps, in addition to those taken by the Paymaster-General, are taken to get the Prime Minister of France and others to bring pressure to bear on those who are holding up the progress of this conference?

The Prime Minister: Of course, I have sympathy with the right hon. Gentleman's interest—it is the same as mine—that these negotiations should succeed. The best method of handling it is a matter which has to be considered from time to time.

Mr. H. Wilson: Since this project, from its earliest days, has received widespread bi-partisan support in this House, will the right hon. Gentleman bear in mind that we have had very little information from the Government on this question over a period of twelve months, apart from a few remarks in a debate a fortnight last Friday? Would he consider what can be done to give hon. Members more information?

The Prime Minister: I think that the meeting in early May will be of great importance, and it would be wiser to wait until that meeting has taken place.

Oral Answers to Questions — AIRCRAFT (NUCLEAR WEAPONS)

Mr. Stonehouse: asked the Prime Minister what arrangements have been made for him to be consulted before President Eisenhower gives the order to United States aircraft, flying from Great Britain under the Dewline warning system, to use the hydrogen bomb.

The Prime Minister: Our understanding with the United States Government ensures that no such order would be given unless the agreement of Her Majesty's Government had first been obtained. It would not be in the public interest to reveal the detailed machinery of consultation.

Mr. Stonehouse: Has the Prime Minister read the long reports which came


from the United States control centre in Nebraska last week which described the Dewline system and in which there was no mention about consultation with himself? Does he know that that has created great alarm here because there is a strong feeling that no consultation is to take place and that there is to be no control over the use of American aircraft flying from bases in this country?

The Prime Minister: If there is confusion, I shall be very glad to try to set it at rest. The consultation between the two Governments is an obligation which is of very long standing regarding any American bombers that operate from British bases. The Dewline system is a radar chain in Northern Canada.

Oral Answers to Questions — NATIONAL FINANCE

Civil Service (Pensions)

Vice-Admiral Hughes Hallett: asked the Chancellor of the Exchequer if he will state the amounts of the maximum pensions, including increases under the Pensions (Increase) Acts, at present payable to members of the clerical officer, executive officer, higher executive officer, senior executive officer and chief executive

officer grades in the Civil Service who retired in April, 1939, and in April, 1949, respectively, after 40 years' pensionable service, and of the corresponding maximum pensions payable to members of those grades who retired in January, 1958.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon): As the Answer contains a number of figures, I will, with permission, circulate it in the OFFICIALREPORT.

Following are the figures:


MAXIMUM ANNUAL PENSIONS NOW PAYABLE TO OFFICERS RETIRED AFTER 40 YEARS' SERVICE


Pension beginning
1st April, 1939
1st April, 1949
1st January, 1958


Pension and Pensions Increase
Pension and Pensions Increase
Pension



£
£
£


Clerical Officer
271
258
332


Executive Officer
369
365
474


Higher Executive Officer
438
441
584


Senior Executive Officer
557
556
724


Chief Executive Officer
658
665
875

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

Orders of the Day — BUDGET PROPOSALS

3.30 p.m.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): Listening to a Budget speech is one of the most severe of the annual austerities that Members of Parliament lay upon themselves. It is, I suppose, one of those disciplines that are considered formative of our national character.
I do not know whether it is merely self-pity, or whether I am right in thinking that have a rather particularly difficult task today. I remember reading that after listening to the performance of a violin solo someone said to Dr. Johnson, "Sir, a very difficult piece to render, that", to which the Doctor replied, "Difficult, do you call it, Sir! I wish it were impossible". I hope that the Committee will not feel the same way about my performance today.

REVIEW OF 1957–58

This is, indeed, a difficult moment at which to read confidently the barometer of world trade and economic activity. It is clear that the economic climate of the free world is changing. Inflationary pressures are subsiding and in some countries production has fallen off. The question is, does this portend only a pause, soon to be followed by a renewal of the upward trend, or are we at the beginning of a more protracted downward movement?

It is too soon to be sure. But of one thing, at least, we can be certain. Whatever the outcome, our policies must be guided by three dominant objectives: to maintain the value of our currency; to strengthen our external finances by increasing our reserves or reducing our liabilities, or both; and to play a part, consistent with our resources and responsibilities, in the expansion of world trade and in the development of the Commonwealth. Our strategic aim must always be steady expansion, though tactics may

sometimes dictate a pause. These are the thoughts which have been uppermost in my mind while I have been working on this Budget, and they are the threads which bring together our present policies and my proposals for the future.

I want to describe shortly, first, the course of economic events over the past year and to give my impression of our present state of economic health. I see a number of heartening signs that it has improved. Looking first at the situation at home, although the growth of production was small in 1957, there were some satisfactory shifts in the use which we made of our resources. For example, Government expenditure on goods and services fell slightly in real terms. Consumption rose by about 2 per cent., which was reasonable considering that it had not risen in the year before. The rate of personal saving reached the record level of 10 per cent. of income after tax. This is satisfactory and encouraging and something from which we shall benefit in the future.

The lion's share of the increase in output went to investment, which is again important, both in stocks and fixed capital. In 1957, the rate of fixed investment rose by 5 per cent. in real terms. Over the past five years, the proportion of the national product devoted to fixed investment has risen from 14 per cent. to 17 per cent. These are all signs of growing economic strength.

The excessive pressure of demand has perceptibly relaxed over the past year. Although we are still fully employed by any normal standard, there is rather more unemployment than a year ago—2 per cent., compared with 1·7 per cent. in March last year. There are also fewer vacancies than a year ago. I know very well that statements about the high level of employment over the country as a whole carry little comfort in those particular places where the percentage of unemployment may be several times greater than the national average. Local pockets of above the average unemployment must be tackled with all possible energy, and I shall say more of this later. But they must not cause us to lose a sense of perspective when we are scrutinising the whole picture.

So far, I have mentioned the favourable signs. But there is, of course, another side to the picture. Costs and prices


again proved to be our Achilles' heel. Comparing 1957 with 1956, the price-level of output as a whole was 3 per cent. up, with retail prices 3½ per cent. higher. Once again, the chief cause was that wages and salaries went up much faster than output—6 per cent. compared with 1½ per cent. Profits rose on much the same scale, although their effect in the aggregate on prices was, of course, much smaller. These figures are important because they explain our failure as a nation to halt inflation last year. And most of our present economic worries stem from that fact.

I am glad to say that in several important respects recent months have shown greater stability. The retail price index has remained steady over the past five months and wholesale prices of manufactured goods have also been stable. It may be that the retail price index will go up slightly during the next few months, but the prospects generally there are bright. At present, the terms of trade are exceptionally favourable to us. Import prices are 11 per cent. lower than a year ago, while export prices have so far not fallen. We now have a golden opportunity, therefore, at least to halt, and possibly to reverse, the trend of rising prices from which we have suffered for so many years. We cannot count on the terms of trade remaining so favourable to us for very long and this makes it all the more important that we should make full use of this opportunity.

Turning to the external side of our affairs, our trading position was adversely affected during the first part of last year by the aftermath of the Suez trouble. Over the year as a whole, however, we had a substantial and encouraging current surplus. Indeed, it is probable that the published figure of £237 million is, in fact, an underestimate, since some of the very large receipts during the year which cannot be identified are almost certainly attributable to current transactions. But one must remember, again, that this surplus was helped by the very favourable movement in the terms of trade in the later part of the year.

As hon. Members will know, the monthly trade gap in the last few months has been considerably reduced, mainly as a result of the big fall in import prices. Our exports, however, have recently levelled off after a long period of steady

growth. This, of course, is an unwelcome result of the more difficult conditions in overseas markets, caused by the check to the growth in industrial expansion in the United States and elsewhere. But as recent experience has shown, we can earn a current surplus big enough to provide for our long-term normal investment and still find ourselves with serious problems for sterling.

I am not going to trouble the Committee with a full exposition of the complexities of the overseas capital account, but the broad story can be put quite shortly, I think. Both in 1956 and in 1957 our surpluses on current trade were sufficient or more than sufficient to cover our normal long-term overseas investment. However, in both years there were very large reductions in the sterling holdings of overseas countries—over £150 million in each year. These amounted, of course, to reductions in our liabilities. But falls of this kind would have led to big losses in the reserves had we not undertaken fresh borrowing.

In 1956, we drew £200 million in dollars from the International Monetary Fund. In 1957, we drew £89 million from the Export-Import Bank. We took back the 1956 interest on the North American loans, when it was agreed that this payment should be deferred, and further arranged the postponement of the service, both principal and interest, due at the end of the year on the same debts. Because of these operations the reserves actually rose a little in 1956 and by rather more in 1957: what we did was to reduce our short-term liabilities, at the expense of incurring medium-term and long-term debt.

The sterling withdrawals of which I have spoken were of two kinds. Those by non-sterling countries largely, though not wholly, reflected lack of confidence in sterling. They were substantial in the last part of 1956 and in the third quarter of 1957. The other kind of withdrawal was made by sterling area countries. This was due not to speculation, but to the worsening of their general balance of payments on commercial account. The rundown of sterling area holdings was concentrated in the last half of 1957 and amounted to no less than £226 million.

In the decline of confidence in sterling which reached its climax in the events of


last autumn, there were a number of factors, both internal and external, which led to a sudden outflow of our gold and dollar reserves. One of the most important was the continued rise in money incomes in the United Kingdom which produced serious doubt—a doubt which was felt within our own shores as well as overseas—about the stability and strength of our currency. Faced with this crisis the Government took drastic action to restore confidence—in priority to every other economic issue. The decisive response which we made was effective and received, too, I believe, the general support of the country as a whole. Since then, as the figures have shown, confidence in the £ has been restored.

In the third quarter of last year we lost £189 million from the reserves. In the six months since then we have increased the reserves by £328 million; £152 million of this came from borrowing from the Export-Import Bank and from postponing debt payments; the remainder, £176 million, reflects a strong commercial position and a genuine return of confidence in sterling. Broadly, therefore, even apart from the special measures taken to reinforce the reserves, we have regained what we lost in the third quarter of last year.

Today the reserves stand higher than at this time last year, excluding altogether the fresh borrowing and the postponement of the debt service to which I have referred. Indeed, at the end of last month the reserves were standing only fractionally less than £1,000 million. In addition—this is important and interesting—we reduced our sterling liabilities to overseas countries in the second half of last year by £227 million, and in this same period we increased our private overseas investments by over £100 million. So we have some solid progress to record.

EXCHEQUER OUT-TURN 1957–58

I will now follow the usual practice and give the Committee as condensed a summary as I can of the Exchequer accounts. The details will, of course, he available in the White Paper later this afternoon and I shall, therefore, mention only the most important figures.

REVENUE

First, the out-turn for the year which has just closed. Revenue last year was £5,343 million, £185 million more than in the preceding financial year and £54 million above the estimate. Inland Revenue duties came to £2,855 million and Customs and Excise duties to £2,150 million, that is, £44 million and £33 million respectively above the estimate. Other revenue, at £338 million, was £23 million below the estimate, mainly due to lower receipts from the sale of Government-owned stocks.

EXPENDITURE

Expenditure above the line was originally estimated at a total of £4,827 million. It turned out to be £4,920 million, or £93 million higher. This increase was spread pretty well over the whole field of expenditure. The cost of the Consolidated Fund services was £782 million, £25 million higher than the estimate. This was due, in the main, to increased debt charges arising from higher interest rates, offset in part by the postponement of the payment of interest on the North American loans.

Defence expenditure exceeded the estimate of £1,420 million by £10 million, as a result of increased prices, which to this extent could not be offset by economies elsewhere. Civil expenditure, at £2,708 million, was £58 million above the Budget estimate. The main increase was in the cost of agricultural subsidies, due to the fall in market prices, particularly of cereals, pigmeat, eggs, and milk for processing and to the additional cost of awards following the 1957 Annual Review. Increases in the cost of running the social services and other parts of the civil administration were largely offset by savings on other items.

We have had a good deal of discussion in recent months about Government expenditure and I will not now enlarge upon it, but it is perhaps worth recalling that, while it is true that Government expenditure has risen year by year, it has risen more slowly than the value of the gross national product. Government expenditure, as defined in the national income estimates, has fallen, as a percentage of the gross national product, from 29 per cent. in 1951 to 25 per cent. in 1957, a good deal of which was during the period


when my right hon. Friend the Lord Privy Seal was at the Treasury.

To sum up the result above the line, there was a surplus of £423 million compared with an estimated surplus of £462 million and an actual surplus in the previous year of £290 million. So the estimates made by my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) last year have proved to be very close to the mark.

BELOW THE LINE

Below the line, receipts at £261 million were £6 million less than estimated but payments, at £896 million, were up by £42 million. The main increases were in net advances to the National Coal Board, which, at £81 million, were £36 million above the estimate, and in the issues required to meet the deficits of British Railways, which were £16 million above the estimate. The increase in the net advances to the National Coal Board was caused, in the main, by an increase in stocks of small coal. Advances to the other nationalised industries, at £295 million, were £5 million above the estimate, while loans to local authorities, at £92 million, were £8 million lower. The reduction in loans to local authorities reflects the continued success of the policy of encouraging these authorities to borrow in the market wherever possible.

SUMMARY OF OUT-TURN

The out-turn can, therefore, be summed up as follows. Above the line there was a surplus of £423 million. Below the line net payments were £635 million. So the difference which had to be financed by borrowing was £212 million. This was the main factor leading to the net increase over the year of £224 million in the total of the National Debt.

EXCHEQUER FINANCING, CREDIT POLICY AND NATIONAL SAVINGS

Within this total the floating debt increased by £376 million. My predecessor, in last year's Budget speech, hoped that an overall Budget deficit of £125 million would "be amply covered by small savings and other non-inflationary methods of finance." In the event, the requirements of the Exchequer were somewhat higher than he had expected. On the Budget, the overall deficit was

£212 million; and outside the Budget, the welcome increase in the gold and dollar reserves involved a corresponding increase in the capital of the Exchange Equalisation Fund. I do not mind that happening.

The National Savings Movement working under difficult conditions, has contributed what it could, and the authorities have made good use of every opportunity for funding—that is to say, for official sales of longer-term securities in the market. In spite of these efforts, however, some increase in short-term Government borrowing and, therefore, in bankers' liquid assets could not be prevented. Nevertheless, the level of bank advances has fallen over the year by £72 million. I am most grateful to the banks for the co-operation which they have shown in keeping down the level of advances fully in accordance with the undertakings which they gave to my predecessor.

So much for Exchequer management and credit policy in the past year. During the year ahead I am determined to maintain the effort to meet Exchequer requirements without increasing the floating debt. This means a continuing very tight hold on public expenditure, vigorous funding, and, I hope, an increase in Exchequer receipts from small savings.

With this in mind, I have reviewed the terms of the securities offered by the National Savings Movement. My right hon. Friend the Prime Minister's Premium Savings Bond is running well—if I may put it like that. I see no reason for change here or in the arrangements for the Post Office and Trustee Savings Banks. But it is time to raise the limit on holdings of the current issue of the National Savings Certificate. This limit has remained at 600 units since the present series began in August, 1956. It will now be raised to 1,000 units with effect from 1st May. Otherwise, the terms of the Certificate remain the same.

There remains the Defence Bond. The present 4½ per cent. Bond has suffered recently by comparison with the higher yields that small savers can get elsewhere. I intend to issue a new Defence Bond on 1st May, carrying interest at 5 per cent. and repayable in seven years at the rate of £103 for each £100 invested. If held to maturity, the yield will be £5 8s. 6d. per cent. without any allowance for the fact that the bonus


paid on maturity is tax free. The Defence Bond holder will continue to be protected from market fluctutaions; but now he will also get a yield fully competitive with that of comparable gilt-edged securities in the market. These are very favourable terms, but, I think, rightly so.

I know that the past year has been a disappointing one for the National Savings Movement. But I know, too, that there has been no decline in the loyalty and enthusiasm of its voluntary workers. From my own personal experience I know that they are a grand band of people who go steadily on with their good work and are ready to take the downs with the ups. I hope that with the help of the two changes I have mentioned they will be encouraged in the year to conic by the better results which their steadfast efforts deserve.

EXCHEQUER PROSPECTS FOR 1958–59

I turn now to my crystal ball and to the prospects for the Exchequer in the financial year just started.

REVENUE

On the basis of existing taxation I estimate total revenue at £5,490 million—£147 million more than last year. Inland Revenue duties are expected to yield £2,975 million and Customs and Excise duties £2,235 million. These figures are £120 million and £85 million respectively more than last year's yields. I expect an increase of £3 million from motor vehicles duties, which are estimated to yield £104 million.

The estimate for non-tax revenue is £176 million, compared with £237 million last year. One reason for this fall of £61 million is that last year we had a book-keeping windfall of £37 million from the return of interest payments on the North American loans, which had been deposited in a special account pending negotiation with the Governments concerned. As my predecessor explained last year, this item was not revenue in any real sense; but it had to be included in the accounts. Another reason is that miscellaneous revenue will be reduced by the continued fall in the sale of Government-owned stocks.

EXPENDITURE

Now as regards expenditure. I estimate total expenditure above the line this year at £5,075 million—£155 million more than the out-turn for last year. The Consolidated Fund services will require £816 million in the coming year—£34 million more than last year's out-turn. The difference is largely due to the fact that last year's out-turn benefited, as I mentioned, from the postponement of the interest charges on the North American loans.

Supply expenditure is estimated at £4,259 million, £44 million more than the final Estimates for last year, including all Supplementary Estimates, and £121 million more than last year's out-turn. This increase on last year's out-turn is the net effect of a rise of £133 million in civil expenditure—notably in the social services—and a reduction of £12 million in Defence expenditure. The latter Estimate assumes the receipt of £47 million from Germany towards the cost of our Forces in Germany. As the Committee knows, this matter is still under discussion in the North Atlantic Treaty Organisation.

On the basis of existing taxation, therefore, total revenue is estimated at £5,490 million against expenditure of £5,075 million, giving an estimated surplus above the line of £415 million. This compares with last year's surplus of £423 million, which was, however, inflated by the £37 million of returned interest to which I have just referred.

BELOW THE LINE

I expect the net total of expenditure below the line to be £35 million less than last year's out-turn. Loans to local authorities next year I put at £65 million, £27 million less than last year. Capital expenditure by the Post Office, charged below the line at £38 million, is down by £41 million. This results from the new accounting arrangements announced last November. The National Coal Board  expected to need £76 million. Issues to other nationalised industries I put at £370 million, an increase of £75 million over last year. The bulk of this increase is accounted for by the British Transport Commission, whose investment programme is getting into gear, and who, last year, was able to keep down its borrowings from the Exchequer by using


balances which it had available at that time for investment.

Repayments by the nationalised industries in respect of earlier borrowings are, however, expected to be £16 million higher than last year. Finally, £61 million is likely to be required for the British Transport Commission under the Transport (Railway Finances) Act to meet its current deficit, as against £66 million last year. These capital requirements are within the limits laid down by the Government last September for investment in the public sector.

EXCHEQUER ADVANCES FOR NATIONALISED INDUSTRIES

As the Committee knows, the power to make advances from the Exchequer to the nationalised industries—other than the National Coal Board—was first given in the Finance Act of 1956. That power expired on 31st March of this year, but was extended to 31st August by the Nationalised Industries Loans Act, which received the Royal Assent last month.

Parliament passed that Act on the understanding that I would make substantive proposals in this Budget either to abandon or to continue the practice of using the Exchequer as the source of capital finance for these bodies. I have decided to recommend that the practice should continue, at any rate for another year. The reasons which led my right hon. Friend the Prime Minister to propose this course in 1956 hold good in the market conditions today. They were set out cogently in his Budget statement and I will not repeat them.

It is still the case that these industries cannot, in practice, borrow on their own credit. If they borrow on Government credit there are decisive reasons of credit and market management for centralising the raising of the money in the Exchequer. The renewed powers, for which I propose to move a procedure Resolution, will, however, expire at 31st August, 1959, so that the matter may be reviewed again in next year's Budget.

SUMMARY OF EXCHEQUER PROSPECTS

To sum up the Exchequer prospects for the year ahead, if taxation remained unchanged I should expect a surplus above the line of £415 million and net

total expenditure below the line of £600 million, giving a deficit overall of £185 million, as compared with last year's out-turn of £212 million.

ECONOMIC PROSPECTS FOR 1958–59 AND BUDGET POLICY

I now come to the part of my speech in which I must explain my view about our economic prospects and the policies which I think we should follow. As I am sure my distinguished predecessors in this Chamber will agree, such a task is seldom an easy one because of the mists which are apt to cloud the horizon when we try to peer ahead. It is the more difficult this year because there are two considerations which must be in the front of all our minds. We must succeed in our struggle for stable prices and we must find the right course to pursue in a world threatened by tendencies to recession.

Looking, first, at probable developments in the economic situation at home, in spite of some uncertainties the prospects for home demand this year seem reasonably satisfactory. I will deal with demand under the main heads of investment, consumption, Government outlay, stocks and exports. Together, these determine the level of production and employment. As regards fixed investment, we have taken steps, as the Committee knows, to stabilise expenditure in the public sector this year at the same level as last year. Private investment expenditure, so far as can be judged from sample inquiries which we have made, also seems likely to stay at about its present level, which is, in fact, an all-time record.

Turning to consumption, there is a special factor at work this year, which reflects to some extent the world situation to which I have been referring, namely, the low level of import prices. This will tend to raise the volume of consumption, by keeping prices—especially food prices—down in relation to incomes. Provided that we maintain our competitive power, employment should remain at a generally high level and this should make possible a moderate increase in consumer spending in real terms.

Government expenditure will be about the same as last year in terms of real


resources. The level of expenditure all across the front—civil and defence—will continue to be held at the absolute minimum consistent with the execution of our current policies.

The remaining component of internal demand is business expenditure on stocks. A good deal has been spent on additions to stocks in the last three years. Now that commodity prices are falling and production at the moment is not rising, there is likely, I think, to be less stock-building this year than last, with correspondingly less demand for home production and imports. Past experience both here and in the United States has shown that fluctuation in expenditure on stocks can play quite an important part in expanding and contracting economic activity. This, then, I would say, is the big uncertainty on the home front.

The last component of total demand, in the economic sense, is exports. Their course will depend very much this year on the developments abroad. We must remind ourselves that we are dependent on overseas markets for the sale of nearly a quarter of our national output. So far, foreign demand for our goods has kept up well. But we are seeing to. day something which we have not seen for many years—a halt in the general upward trend of world economic activity.

It is right that we should be watching particularly closely developments in the United States. The present recession there is naturally causing a feeling of uncertainty among businessmen everywhere, and particular anxieties to the primary producting countries. Everyone is wondering how deep it will go, how long it will last and whether it will "saucer out", in the apt phraseology of our friends across the Atlantic. No one can tell yet. We must bear in mind that the world economic background is by no means as buoyant as it was at the time of the 1954 recession. On the other hand, the United States authorities are alive to their economic problems and have so far handled them since the war with undoubted success.

Nevertheless, we must take this situation seriously into account both in assessing our own position and in formulating our policies. We must be careful not to do anything to add to world difficulties. At the same time, it is no use our deceiving ourselves into thinking that we can

carry the world on our shoulders or stem single-handed forces which are to only a limited extent within our own control. If we tried to halt a world recession by undiscriminating expansion of economic activity at home we should fail; we could not hope to buy ourselves out of it and we might well come near to ruining ourselves if we tried. As my right hon. Friend the Prime Minister said the other day,
The worst possible solution would be for this country to find itself an island of inflation in a world of deflation.
That is very true.

In these circumstances, I will not attempt to forecast exactly how our balance of payments will work out in the rest of this year. But with the terms of trade so much in our favour I have every confidence that our position will remain strong. This does not mean, I am afraid, that we can count on the firm foreign demand for our exports that we have enjoyed almost without a break since the war. Exporting is going to become more difficult. That is why it is so vitally important, in the new circumstances, that we should keep ourselves fully competitive. I cannot exaggerate the importance of that. It is not too much to say that our national livelihood depends on doing so. It will be a fine achievement in the present world situation if we can maintain the volume of our exports. Any serious failure in this direction would, of course, be bound to have a seriously depressing effect on our economy. Incidentally, it is good news how well our cars are selling on the other side of the Atlantic at present.

Mr. Harold Davies: Sell a few to Peking.

Mr. Amory: To sum up the economic prospect, home demand should, on the whole, remain firm. But with our foreign customers running into difficulties, export demand may slacken and this may be reinforced by a fall in business expenditure on stocks. The level of industrial production has tended to decline slightly in the last few months and unemployment has been rising. These trends may well go rather further during the rest of the year, but I do not believe that a sudden sharp recession in this country during the coming months is likely. But this will, of course, depend both on our continuing to follow economic policies


appropriate to the circumstances in which we find ourselves and on how things develop in other parts of the world.
Before I come on to our future policies, I want to say a few words about sterling and the sterling area. I recalled earlier the Government's declaration that the strength of sterling remained the primary objective of our economic policy. By that I mean not only a stable value for the £ at home and abroad. I mean the successful working of a sterling area system.
These sterling area arrangements are extremely flexible. The essential features are the use of sterling as a reserve currency by the other countries in the area, the freedom of capital movements from this country to the rest of the sterling area, and the wide and largely unrestricted use of sterling not only by these countries but by many others for trading purposes. These arrangements have proved of immense value in recent years not only to us but to the whole sterling and non-sterling world.
Unless sterling is strong it cannot continue to be the currency which finances a large part of the world's trade. There is no other currency in a position to take its place; nor could one quickly be developed. This is a matter not only of experience, but also of banking connections abroad and the facilities of the City of London. No country is more dependent on international trade than ours; none would suffer more from the lack of a medium for financing it.
It seems rather a pity, therefore, that in recent months voices should have been heard questioning the value of the system and to suggest that in some unspecified way it might be wound up or that it should at least be drastically altered. Admittedly, our reserves are not as big as we should like, particularly in relation to our liabilities. This is, in part, the aftermath of war. But this insufficiency can be exaggerated. The liabilities look big on paper. But we should remember that a large part of them are held for long-term purposes. Provided that confidence in sterling is maintained, only a relatively small proportion will have to be met in the immediate future.
It is also the case that at the present time, temporarily and for reasons partly outside their control, a number of sterling

area countries are having to draw down their balances. This puts a strain on the reserves and limits the freedom of our domestic action at home. To a large extent, however, the rundown in their balances is due to a change in the terms of trade. This same change in the terms of trade makes it easier for us to meet the strain. Moreover, the fact that sterling area countries can draw down their balances in bad times, just as they build them up in good times, is a most useful contribution to world liquidity. In present circumstances and in the immediate future this is likely to prove of very great value as a cushion against the effects of diminishing income in those primary producing countries which hold their reserves in sterling.
I hope, therefore, that we shall neither exaggerate the difficulties that come from our position as the banker of the sterling area, nor underestimate its value to us. In a world where liquid reserves in other forms are all too scarce, sterling and the sterling area are indispensable to the smooth functioning of a large part of the world's trade as well as to the unity and strength of the Commonwealth. We do not intend to tamper with this system, which is working well. On the contrary, our purpose is that it shall be preserved and developed, that confidence in its viability should be fortified, and that we shall be able to move gradually towards still wider freedom and, as opportunity offers, make yet greater contributions to Commonwealth development. This all means that we must conduct our own finances with a special caution in difficult times. It requires, too, that we must maintain close and continuous consultation with our sterling area partners. This will be especially reinforced this year by the Commonwealth Economic Conference, in September, and through the preparations for it which are already in hand.
Furthermore, there are the international institutions of which we are members, notably the International Monetary Fund, the International Bank for Reconstruction and Development and the O.E.E.C. These institutions have already accomplished much. I believe that the problem of world liquidity and of ensuring the strongest possible base for the trade of the free world is a matter of increasing importance and urgency. It may well be that a solution can best


be found by the steady expansion of institutions such as the International Monetary Fund and the International Bank.
Such a solution would, of course, require the active good will and assistance of the chief creditor countries. It may be that more can be done cooperatively within the Commonwealth. That will doubtless be discussed at the Economic Conference. I can only say that in this vitally important field of the provision of capital and credit for the trade of the free world any sound plans that can be worked out for more effective international co-operation will receive the wholehearted support of Her Majesty's Government.
I will now outline the policies that I think we should follow. At home our first priority must continue to be to win the battle against inflation and our success or failure there will largely determine our fortunes in the months and years ahead. I think that the past six months or more have seen quite a significant change in the temper of public opinion— [Interruption.] I had not finished my sentence—on economic matters. I sense a greater realisation among people generally of the real meaning of inflation and the dangers, the hardship and the social injustice that it entails. There are signs that opinion is becoming less tolerant of the endless spiral process whereby, as a nation, we have paid ourselves in incomes more than we have earned by our efforts. If the experiences of the years since the war have at last spread a wider understanding of the folly of this process, we have made an important advance.
One factor which has contributed to this fuller understanding has been the first Report of the Council on Prices, Productivity and Incomes. This Report gives us an exposition of the facts about movements in wages and salaries, prices, profits and dividends over recent years—hard facts which exist quite independently of the political or economic views of the reader. I know, of course, that everybody does not agree with every opinion which the Council has expressed. It may be all to the good that the report has given rise to lively controversy. The more informed discussion we have of these matters the better. But disagreement with some of the views expressed by the Council does not dispose of the

problem. It cannot excuse all those concerned—including the Government—from continuing the search for a constructive solution. By a constructive solution I mean arrangements which will give us reasonable assurance that an expanding economy does not inevitably lead to rising costs and prices as it has done over the post-war years.
The Government's view on wage settlements has been made perfectly clear. If wage increases in general go beyond the national increase of productivity this is bound to damage the national interest. It looks very much as though this fact has been ignored in a number of voluntary agreements within the past few months. It is no use those concerned in industry pressing the Government to follow a firm and consistent line in these matters if they themselves ignore, in practice, the precepts which they urge on others so strongly.
If general wage settlements this year ignore the criterion I have mentioned the only result, in the long run, will be that fewer people will be in jobs, the security of those in employment will be reduced, and the strength of our currency will once more be put in jeopardy. On the other hand, if all concerned show moderation during the next few months, we shall, I believe, have laid the foundations on which we can confidently hope to build a steadily expanding economy, with a stable cost of living and with fairness to all sections of the nation.
In the light of all this it is clear that it is too soon yet to contemplate any general relaxation on the economic front. Although the economy is capable of meeting a higher level of demand this year than is likely to be made on it, we are not in a strong enough position yet to resume a policy of general expansion. In the first place, we have only just emerged from a dangerously strained position. We certainly cannot be sure that we have yet fully attained price stability; and whether we do or not will depend a very great deal on the moderation shown by all concerned in fixing the level of wages and salaries on which our costs so largely depend. In the second place, our external financial position, stronger as it certainly is, is one that still imposes caution. We have had a series of foreign exchange crises, and I am determined to spare no effort to see that we do not have another.
Our present policy must, therefore, be to consolidate our improved position. I do not suggest that any intensification of our disinflationary measures is needed. The September measures succeeded in their first object of restoring confidence in the £, and I was able, last month, to approve a reduction in the Bank Rate from the exceptionally high level of 7 per cent. But the moment has not yet come for any general relaxation of credit policy. It is still necessary for the banks to hold the level of advances and for the hire-purchase restrictions to be kept on. The Capital Issues Committee will continue for the present to maintain its critical scrutiny.
That is the position at the moment. But I would like to re-emphasise that, as a Government, we are convinced that the long-term welfare of this country demands a steady expansion of our national economy. That is the objective of all our policies. We shall not, therefore, keep the brakes on one day longer than we must. We dislike restrictions intensely, and we are eager to resume expansion. But the lesson from the past is that as we resume expansion we must do so at a steady pace. There is no salvation to be won through increasing production indiscriminately at any cost. That would land us back in rising prices and balance of payments difficulties. I do not believe that the nation really wants to pay such a price.
In any case, I am convinced that in present circumstances it is not a question of getting price stability at the cost of mass unemployment. Indeed, I am glad to say that I see no prospect of mass unemployment at present. There are many ways in which purchasing power could be quickly stimulated if the general level of demand were suddenly and sharply to fall. The real risk of large-scale unemployment would arise if our currency lost its value or we lost our competitive power to such an extent that we could no longer pay for our food and raw materials. In the meantime, we want to see production and employment just as high as we can, consistent with maintaining the value of our money.
There are some things which ought to have priority for immediate action. It must, for example, be right to make every possible effort to foster our export

trade. The Government have been considering whether there are any further ways in which exports can appropriately be encouraged. I have already referred to the Commonwealth's sterling balances. As far as these are run down that should help both to maintain the level of development in the countries concerned and to benefit our export trade.
We have recently undertaken a detailed review of the facilities provided for our exporters by the Export Credits Guarantee Department. Our broad conclusion is that our export credit insurance service is as good as any in the world, and that there is no need, in present circumstances, to make any substantial change in the terms or period of insurance cover which the Department, on the advice of its Advisory Council, is prepared to give. My right hon. Friend the President of the Board of Trade will be making a more detailed statement about this later in the debate.
I emphasise "in present circumstances". We do not want to start a race in credit-giving, but if our competitors were to push the credit terms for a particular type of export beyond those normally insurable and our exporters found themselves excluded for this reason from business, we would be bound to consider extending our cover, too, in the field of trade affected.
We must also be ready to meet the possibility that the level of world trade may continue to fall. In this event the buying power of our customers and industrial activity in this country might be so affected that we would be ready to use the other powers which exist in Sections 2 and 3 of the Export Guarantees Act outside the normal insurance scheme for offering economic assistance to Commonwealth and other overseas countries and to maintain export activity here. This might well involve the provision of guarantees or finance over longer periods than at present.
It is impossible to formulate now a precise policy to cover hypothetical needs and conditions in the future. What is clear is that these other powers in the Export Guarantees Act might be used in the event of a major reduction in world trade involving a pressure on the available currency reserves of those with whom we trade. This, of course, would involve an additional claim on our resources, and


the amount which we could devote to these activities would have to be balanced against other claims at the time.
Then there is home investment. I have already mentioned that total investment—public and private—is likely to remain at around the high level of last year as regards actual expenditure during the coming months. But, as we all know, investment projects take time to mature and turn into actual expenditure.
As regards public investment, the existing tight restrictions on expenditure by central Government, local government and nationalised industries are flexible and can and will be modified or relaxed at any time when the moment seems right. There will be no lack of candidates for relaxation, and there need be no delay.
In the private sector, as I have said, it looks as if about the same amount of investment will be carried out this year as last. But we do not want a gap to develop, and I hope that those who are planning for the future will continue to do so with steady confidence.
I mentioned, at the beginning of my speech, that the need for caution generally should not make us overlook the problem of patches of severe and persistent unemployment. This is an intractable problem, but it is the Government's firm resolve to tackle it with the greatest energy from both ends—endeavouring to bring work to the worker and, when that is not possible, helping the worker to move to where work is available.
We have two steps in mind in this connection which I would like to tell the Committee about. First, I am confirming to the Capital Issues Committee and to the banks that the Government would not wish any projects for sound developments in areas where unemployment is substantially above the average to be held back by lack of credit or finance.
I have also informed the banks that I will regard advances made for this purpose as excluded from their promise to do their best to hold the general level of bank advances. This puts such advances on the same footing as medium credit for exports. Secondly, the Treasury already have powers, under Section 4 of the Distribution of Industry Act, to give financial assistance mainly by loans to industrial concerns in Development Areas. The present areas of above the average unemployment are, however,

mostly outside the present Development Areas.
The Government have authorised my right hon. Friend the President of the Board of Trade to introduce an amending Bill. This will enable the Treasury to give financial assistance provided under the Distribution of Industry Act to a trade or business, if the purpose for which the finance is required is likely to raise the level of employment in a locality in which a relatively high rate of unemployment exists and would otherwise be likely to persist.
The Committee might be interested to know of one type of case in which we need not wait for new powers. The Government are ready to make finance available under Section 4 of the Distribution of Industry Act to assist in the provision of dry docks in Development Areas, if appropriate arrangements can be made for proper contributions from the enterprises themselves and from non-Government sources. The reasons are twofold. There is a grave risk of a shortage of dry-dock accommodation, in particular, accommodation for the larger tankers and other vessels which will be coming forward in increasing numbers in the next decade; and there is substantial unemployment in several places where dry docks have from time to time been projected. I hope that this assistance will prove practical and useful.
In regard to unemployment generally, I only want to say this. It may sound as if my unwillingness to put expansion of production before everything else at any cost means that I regard unemployment as of no great importance and as a low price to pay for the success of an economic policy. That is not my view. I have always considered that the persistent lack of a chance of a job for a person who wants work—as most people do—is one of the most soul-destroying hardships one can imagine. I could, therefore, never be associated, any more than I know any of my right hon. Friends could be, with an economic policy which did not have as one of its main aims the provision of regular productive employment for all who are able and willing to work. It ought to be—and, indeed, it is—our continuous aim, as experience gives us a better understanding of the forces at work, to see just how near we can get to this objective without losing


price stability and putting our balance of payments and our reserves in jeopardy.
To sum up our policies, the four priorities we should set before us are clear. We must make sure that our economy is strong and sound so that it can stand up in whatever weather lies ahead. And that means we must put first the maintenance of the value of our currency and our competitiveness as exporters. We must maintain a high rate of savings and investment, for on that our national future depends. We must make sure our economy is not only sound but fair to all sections of the nation. And we must continue to reduce, as opportunity offers, the heavy burdens of taxation. That these aims can be achieved, I have no doubt whatever. But they only will be if the nation as a whole means them to be. The present time is a critical one. If all of us were to press our own sectional interests to the exclusion of the nation's interest then, let there be no doubt, we should lose all and be back in deep and dangerous economic trouble for which we should have no one but ourselves to blame.

BUDGET PROPOSALS

It is with these principles and objectives in mind that I now ask the Committee to consider my proposals in the field of taxation. If, in the economic circumstances which I have described and with the limited resources which I have available, I were to remit substantial sums of taxation, the result would, in my view, be to jeopardize the consolidation of our economic position which must be our immediate task. That would be rash indeed.

On the other hand, I think that I can justifiably give up some small amount of revenue if, by so doing, I can strengthen our economy at one or two points, improve our tax system, and deal with several cases of special need. Those, therefore, are the objects to which I propose to devote my attention within the narrow limits of finance which I judge to be available this year.

MINOR PROPOSALS

I will start by mentioning a number of minor proposals which, in various ways, will help to improve our tax system.

First, vehicle licences. The present arrangements are not very convenient for motorists and produce an awkward peak load of work for the issuing authorities at the end of each quarter, particularly at the end of December. I propose to take powers to introduce a new system under which licences will be issued from the first day of the first month in which they are required for periods of 4, 8 or 12 months. As an exception, licences costing £3 or less will be issued only for 12 months. The amount of the vehicle tax will be unchanged. The effect on the yield this year will be negligible, but, owing to the changed incidence of payments, I am sorry to say that the yield will be reduced by about £2 million in the first full year of operation. That goes against the grain, but I think it a good thing to do, nevertheless. Details of the arrangements will be announced in due course by my right hon. Friend the Minister of Transport and Civil Aviation.

Secondly, I propose to abolish the Treasury Chest Fund. Treasury Chests, which, for over a century, were the means of providing local currency for the use of our Forces at a number of overseas stations, have now been closed down and the functions transferred to the War Office. The central fund itself can, therefore, be abolised and its capital, amounting to £700,000, be transferred to the Exchequer. Would that I had more Chests to abolish!

A third proposal concerns Tithe Redemption Annuities. The scheme set up by the Tithe Act, 1936, is proving cumbersome and costly to administer and I propose to simplify it by providing for annual instead of half-yearly collection and for the compulsory redemption of annuities of £3 per annum or less, with power to increase this figure at a later date if necessary.

Next, I propose to rationalise the various time limits prescribed by the Income Tax Acts for appeals and claims to relief. The alterations will all be in the direction of making the time limits more generous. This reform, which was recommended by the Royal Commission on Taxation should ease the way of those who have to deal with our complicated tax laws.

Another minor improvement, which follows assurances given by my right hon. Friend the Secretary of State for the


Colonies, is a proposal to give tax relief in certain circumstances on pensions for overseas service becoming payable under the Overseas Service Act.

I am proposing, in the Finance Bill, to meet one point that has been pressed upon me in connection with the Schedule E expenses rule. This will enable some deduction to be claimed in respect of subscriptions to professional societies with activities relating to an employee's work and for certain statutory registration fees. It will cost £¾ million in the first year and £1 million in a full year.

Finally, in this group I propose to remove from the law the anomalous rule that a charitable body such as a church cannot gets its ordinary exemption from tax on property it owns if the property is used by an officer whose income exceeds £150 a year.

DIVIDEND STRIPPING

I now turn to a small group of proposals which I have felt bound to include for the protection of the Revenue. The first has to do with an activity known as dividend stripping. The Committee may remember that this is a device for extracting the liquid taxed reserves of one company with considerable, and unjustified, Income Tax advantage, to another company which gets those reserves as taxed dividends, and at a considerable cost to the revenue.

Although my right hon. Friend the Lord Privy Seal dealt with this in his autumn Budget of 1955, and despite stern warnings given then, I am sorry to say that apparently the fascination of dividend stripping is such that it is still being practised by some. Although the form of the device has somewhat altered—it is now largely practised by companies with trading losses—it remains quite unacceptable and I must put a stop to it.

My right hon. Friend the Minister of Housing and Local Government gave clear warning in 1955, in another capacity, that the Government would not hesitate to legislate against subsequent attempts at dividend stripping, and to make such legislation retrospective. Accordingly, the provisions I now propose will be retrospective to 26th October, 1955, which was the governing date of the earlier legislation. This should make good a loss

of revenue of £2 million a year. But the gain this year will be about £4 million because of the retrospection.

SETTLEMENTS: SURTAX

My next protective provision relates to Surtax. Under the existing law, if a man makes a revocable settlement and on revocation he or his wife might benefit, the income arising under the settlement is treated as his for surtax purposes. A particular settlement, which came before the House of Lords recently, was designed to defeat this law by the artifice of providing that a minimum sum of £100 should not be subject to the provisions of the settlement enabling capital or income to be appointed to the settlor's wife. The taxpayer was successful on this technical point. I cannot approve of such a stratagem.

In this respect I propose to restore the law to what was originally intended, so that if, in fact, any part of the settlement capital or income can go to the settlor or his wife a proportionate part of the income should be treated as the settlor's for tax purposes. This provision will apply for 1957–58 Surtax, which is payable on 1st January, 1959, to all settlements whenever made, but I shall excuse from its operation any settlement made before today that would otherwise be caught, if the settlement is made truly irrevocable within three months after the Royal Assent to the Finance Bill.

ESTATE DUTY: ENLARGEMENT OF LIFE INTERESTS

My next proposal concerns Estate Duty. Under the present law, if a life tenant of settled property disposes of his life interest to the reversioner within five years of his death Estate Duty is payable on the settled property on his death, but the converse case where the reversioner sells his reversion to the life tenant is not covered by the existing law, and the gap is being exploited to a considerable extent.

I propose to close this gap. The broad effect will be to charge duty, when the life tenant dies, on the amount paid by the life tenant for any reversionary interest in the settlement which he has acquired within five years of his death. The legislation will apply only where the purchase of the reversion and the death of the life tenant both take place after


today. I do not expect any material gain to the Revenue this year, but there should be a gain of £2 million in a full year.

STAMP DUTY ON CONVEYANCES

I come now to a subject more readily comprehensible to the lay mind. I propose, in a modest way, to help people who wish to buy their houses. The full rate of Stamp Duty on conveyances of property is £2 per cent. There is at present a sliding scale providing lower rates of duty for conveyances of land and buildings where the consideration is less than £5,000. I propose to improve the scale of graduation and to carry it up to a figure of £6,000. Where the consideration does not exceed £3,500 the conveyance will be entirely exempt.

Where the consideration exceeds £3,500 but does not exceed £4,500 the duty will be at 10s. per cent.; where the consideration exceeds £4,500 but does not exceed £5,250 the duty will be at £1 per cent.; where the consideration exceeds £5,250 but does not exceed £6,000 the duty will be at £1 10s. per cent. and thereafter the full £2 per cent. rate will be payable. I estimate the cost of this change, together with two other minor Stamp Duty concessions, at £3¾ million in the first year and £6 million in a full year.

PERSONAL TAXATION

I turn now to a few small changes in personal taxation. The first two affect some older members of the community, who, I think we would all agree, are, in general, having the most difficult time today. I propose to extend the Income Tax exemption limits for the elderly, which were first introduced last year, from £400 to £440 for the married couple where either husband or wife is 65 or over and from £250 to £275 for the single person who is 65 or over. Where the income is below these amounts no tax at all will be payable. There will Abe an appropriate marginal adjustment for incomes slightly above the limits I have mentioned. To avoid misunderstanding I ought to make it clear that this provision, which is deliberately designed for very small incomes, will not give any benefit where the income exceeds £492 for a married couple and £306 for a single person.

To help old people with rather larger incomes I propose to increase the income

limit for the age relief, which is given where the taxpayer, or, in the case of a married couple, one of the spouses, is 65 years old or more, from £700 to £800. This means that where the total income is below £800 the whole of the income, whether earned or not, will be treated for tax purposes as if it were earned income. This change will reduce the tax on a single person with an investment income of £800 by about £27; for a married couple with the same income by about £32. Here again, there will be marginal provision for incomes a little above the limit set. The cost of these two reliefs taken together will be £2¾ million this year and £4¾ million in a full year.

I also propose to give some help to those who assist elderly or infirm relatives. At present, a taxpayer is entitled to an Income Tax allowance of £60 in such cases if the dependants' income does not exceed £105. I propose to increase that limit to £135, which is a few pounds above the new old-age pension figure of 50s. a week. This will ensure that an increase in social security benefits does not lead to a loss of tax relief.

DEATH DUTIES

In the field of death duties I am proposing to remove the hardship which can arise when two persons such as husband and wife die together, perhaps in an accident, and the law has to presume that the elder has died first. In some such cases it can happen that death duty is levied twice. I propose to provide, in effect, that in such cases death duty shall be levied once only.

I propose, also, that what is known as the existing "quick succession" relief, which gives relief from Estate Duty on a graduated scale where real property or business assets pass on successive deaths within five years, shall be extended to cover other forms of property that pass in like circumstances. This will cost £1½, million this year and £3 million in a full year. Both these changes will take effect on deaths occurring after today.

PROFITS TAX

Next, I come to a considerable reform in company taxation. The Royal Commission on Taxation recommended, and I now propose to the Committee, that the two rates of Profits Tax at present


charged by reference to distributed and undistributed profits of a company shall be replaced by a single rate to be levied on the whole of a company's profits.

This is generally agreed to be a desirable reform. Those responsible for the management of industry and commerce have emphasised to me most strongly that it would strengthen the financial structure of industry, improve the supply of capital to firms which need it most, and help to remove distortions in company finance. This will all help in modernising and expanding our industrial system. It will also greatly simplify the tax code and the work of administration. The existing provisions for exemptions and abatements to companies with small incomes will continue.

To maintain the present yield of Profits Tax—about £275 million a year—a flat rate would need to be set at about 10½ per cent. I propose, in fact, to set it at the more convenient figure of 10 per cent. The change will operate as regards profits from 1st April, 1958, the tax on which, broadly speaking, will not be payable until next year. This will cost a negligible amount this year, £10 million next year and £16 million in a full year. After the profits to 31st March, 1958, have been dealt with, the contingent liability for payment of Profits Tax at subsequent distributions or liquidation will cease. This should remove a source of apprehension in the case of companies which have ploughed a big part of their profits back into the business and should enable them to face the future with greater confidence.

I am well aware that, although the yield of the duty will remain broadly the same, there will, nevertheless, be some differences of incidence as between different sections and units of industry. Some that make lower distributions will pay rather more Profits Tax than hitherto. Some that make higher distributions will pay less. Only a few will break exactly even. The Royal Commission was, of course, aware of these effects when it made its recommendation. They are effects which must be faced if we are to change to a system which, I believe, is generally recognised to be sounder in the long run. I consider that they should be faced now.

I propose, at the same time, to give effect to the recommendations of the

Royal Commission that all loan or share interest paid by building societies, cooperative societies and all loan interest paid by the nationalised industries should be deducted in computing their profits. These bodies will then pay profits tax at 10 per cent. on their properly computed profits. There will be other consequential amendments of the Profits Tax law; in particular, a provision to protect the yield of revenue in the current year by countering any attempts to allocate normal dividends out of last year's profits which should bear 30 per cent. tax to current periods.

INITIAL ALLOWANCES

My last change in direct taxation relates to industrial investment. When I used to work in industry I learnt the prudence of writing off the capital cost of new plant reasonably quickly, so as to be in a position to replace it by something still better when it turned up. I am sure that that is the right policy for British industry in general.

My predecessors have made changes in the system of taxation for capital assets in accordance with the need to encourage or discourage investment expenditure in the aggregate. I said earlier that I hoped that plans for future developments in industry will continue to be made with confidence and I want to give a little practical encouragement in this direction. I accordingly propose to increase the present initial allowances by a quarter so that they become 25 per cent. for plant and machinery and 12½ per cent. for industrial building. For mining works the rate will remain at the special rate of 40 per cent.

These new rates will apply to qualifying capital expenditure becoming due and payable on and after today. These increases should be of particular help to actively developing concerns which need to retain in the business a high proportion of their profits. This will, in many cases, provide a compensating benefit for the slightly increased Profits Tax which the concern may have to pay. The cost of these improvements in initial allowances will be negligible this year, £16 million next year, and £23 million in a full year.

WINE

Turning now to indirect taxation, the first change which I propose relates to the wine duties. Hon. Members who are


interested in such matters will remember that when a reduction was made in the duties on imported wines, in 1949, the change related only to light wines imported in cask. The duty on these wines was reduced by about a half, from 25s. to 13s. a gallon for foreign wines and from 23s. to 11s. for Commonwealth wines. There were good reasons for giving special relief at that time to light wines imported in cask, consumption of which had fallen to a low level.

But this change in the structure of the wine duties has been accompanied over the years by a considerable change—perhaps distortion is not too strong a word—in the pattern of wine consumption. Consumption of light wines has expanded rapidly and is now twice the pre-war level. Consumption of heavy wines, on the other hand—that is port, sherry and other high strength wines—is still at little more than half the pre-war level. This is not necessarily a direct consequence of the structure of the duty. In wine, I am advised, tastes and fashions change. But it cannot be disputed that the duties on light and heavy wines are now further out of alignment than is reasonable.

The trade has represented to me that the duties on heavy wines should be reduced by 24s. a gallon. I am afraid that in the present circumstances I cannot go as far as this, but I propose to reduce the duties on heavy wines by 12s. a gallon, equivalent to 2s. a bottle. The basic duty on foreign heavy wine imported in cask will accordingly be reduced from 50s. to 38s. a gallon, while the corresponding rate for Commonwealth wine will come down from 40s. to 28s. a gallon, thus maintaining the existing Preference margin of 10s. a gallon. There will be a similar reduction of 12s. a gallon in the rates for heavy wines, whether still or sparkling, imported in bottle. The Excise duty on still wines of comparable alcoholic strength produced in this country will be reduced by 12s. a gallon.

The increase in trade to be expected from these reductions of duty will benefit the Commonwealth, especially Australia and South Africa as well as those European countries, mainly Portugal and Spain, which supply us with heavy wines. These changes will operate from tomorrow, so hon. Members will, I fear,

have to postpone their celebrations for a few hours. I estimate the cost at £2¾ million this year and £3 million in a full year.

METHYL ALCOHOL

While we are on the subject of stimulants, I also propose to make a small change relating to methyl alcohol. When it is purified, methyl alcohol is liable to the same duties and revenue controls as potable spirits. This is slightly anomalous, for methyl alcohol is a poison and so cannot be recommended as an alcoholic beverage. In fact, it is used for industrial and scientific purposes and the duty is largely repaid or remitted. I propose therefore, to simplify matters by cancelling from 1st August the liability to duty as spirits. This will involve a loss of a few hundred pounds of revenue, but will secure a far greater saving of administrative expense and effort. The protective duty of 33⅓ per cent. on imported methyl alcohol will not be affected.

ENTERTAINMENTS DUTY

The Committee will recall that a number of changes were made in the duty on entertainments by my predecessor last year. A duty of £1 per licence was imposed on television, which had become a strong competitor with other entertainments. The duty on the cinema was reduced, while the theatre and sports, which for a long time had paid appreciably lower rates of duty than the cinema, were freed from duty altogether.

It was not to be expected that the changes in public demand for entertainment which had been taking place would suddenly come to an end. But the movement during the past year has been on a scale which makes it necessary to consider whether some further adjustment in the duty is called for. Attendances at cinemas, which had been declining for some years, have in the last financial year fallen much more sharply. The industry have represented to me with vigour, both in a memorandum and at a meeting with my hon. and learned Friend the Financial Secretary, that in these circumstances the Entertainments Duty on cinemas should be abolished. Even hon. Members of this House have not been altogether silent.

I have considered carefully all that has been said. I must say frankly that


it can not possibly be an object of Government policy to keep open the doors of every cinema in the country, regardless of the tastes and habits of the public. If people prefer to occupy more of their leisure time in other forms of entertainment and less in film-going, some reduction in the number of cinemas seems inevitable. However, I am satisfied that the present level of the duty is, in the changed circumstances, now too high and should be substantially reduced.

The present rate of duty is 50 per cent. of the amount by which the total admission price exceeds 11d. I propose to reduce it to 33⅓ per cent. of the amount by which the total admission price exceeds 1s. 6d. The combined effect of reducing the rate and raising the starting point of the duty will be to reduce the average level of the duty by rather more than one-half. I also propose to simplify the arrangements for collecting the duty in a way which should both assist the trade and save work in the Customs and Excise Department.

This is a substantial relief, which should be of real assistance to the industry. It should be of particular help to the smaller cinemas, many of them in small towns, where the closing of what may be the only cinema can be a serious loss. I believe that there is still a keen demand for good cinema entertainment, even if audiences are smaller and more discriminating than in the past.

In reaching this decision. I have had fully in mind the difficulty which the fall in box office takings has caused to the industry as a whole—producers as well as exhibitors. I believe that we need to sustain a vigorous British film production industry. British producers will, of course, obtain a share of the reduction in duty under the ordinary contractual arrangements for renting films. This change should help them to continue to improve standards and to take full advantage of the openings for an improvement of earnings from film production which, I believe, the future will bring.

In addition to the benefit which the producers will derive from the reduction in duty, there is also an arrangement, as the Committee is aware, under which a levy based on cinema admissions is collected from the exhibitors and paid into a fund for the support of British film production. The question of the future

yield of the levy is under review by my right hon. Friend the President of the Board of Trade and I have consulted with him in order to satisfy myself that the proposed reduction in duty will provide room for any change he may consider necessary. My proposal, which will operate from 4th May, will cost £13 million this year and 14½ million in a full year.

PURCHASE TAX

I now come to Purchase Tax. My right hon. Friend the Member for Monmouth undertook to examine various apparent anomalies in this tax which were brought to his notice in the course of our debates on the last Finance Bill—an undertaking which I renewed. Before I come to the results of the general review which I have undertaken of the tax, I want to say a few words about a larger issue of which we have heard a good deal in recent months, namely, the possibility of substituting for the Purchase Tax a general sales or turnover tax imposed at a low rate over a much wider range of expenditure.

Since the last Budget this possibility has been thoroughly examined, in the light both of our own experience in this country over the seventeen years during which the Purchase Tax has been in force, and also of the systems of sales and turnover taxation employed in some other countries. Personally, I have always been attracted by the idea of a general tax at a low rate, as an alternative to the Purchase Tax in its present form. I certainly did not approach this subject with any prejudice in favour of the existing system. Nor, I fancy, did my right hon. Friend the Member for Monmouth.

But for all the attractions, I can see little prospect—at any rate, in the foreseeable future—of changing over to a retail sales tax. I will explain briefly why I have reached this conclusion. Let me, first, remind the Committee that Purchase Tax yields nearly £500 million a year. I have had to assume, while I have been considering this matter, that we shall have to go on looking to some form of indirect taxation on a wide range of articles to produce a yield on about the present scale.

First, what scope is there for broadening the base of the tax? Ideally, one may say that it ought to apply to all


consumer expenditure. But how would this work out in practice? Personal consumer expenditure in the United Kingdom is about £14,000 million a year. Breaking this total down into the main items we first have services at about £3,800 million. Theoretically, I know that this is a potential field for indirect taxation. But does it make sense? The biggest element in this total is the cost of house accommodation. Then we have travel, insurance, fuel, school fees, payment for the chimney sweep, for the undertaker, and so on. Could we really contemplate the complication and confusion of trying to tax these multitudinous ingredients of life in the modern world? I believe that the practical answer is no.

Next, we have between £4,500 and £5,000 million spent on goods which are already subject to Purchase Tax or to other revenue duties—tobacco, liquor, petrol, and so on. Another £4,500 million is spent on food. I do not personally recoil in absolute horror at the idea of taxation on at least some items of food. But it would surely be unrealistic to regard food as a major source of revenue.

We are left, therefore, with less than £1,000 million of expenditure on a variety of untaxed goods—young children's clothing, many textiles, books and newspapers, household soap and cleaning materials—in fact, a whole host of things which have at various times in the past been deliberately exempted from tax. Even assuming that all these goods were included in the scope of the present Purchase Tax it would require a uniform rate of tax approaching 20 per cent. of the wholesale value to produce the present yield. I believe, therefore, that the comprehensive sales tax charged at a very low rate but yielding the same revenue as the present Purchase Tax is for practical purposes something of a mirage. And the same is true of a turnover tax.

Turning from the scope of the Purchase Tax to the method of collecting it, many people have suggested that it ought to be imposed at the retail rather than at the wholesale stage. This would, I know, have some advantages from the point of view of traders. But it would also have serious disadvantages. At present, we collect Purchase Tax from about 60,000

manufacturers and wholesalers. If the tax were charged at the retail stage it would have to be collected from about a quarter of a million different points, if not more. It is not surprising that the view reached in 1940 was that it was much more efficient to collect the tax at the earlier stages on the smaller number of traders. I believe that that view is just as right today as it was then.
And it is not merely a question of the number of collection points. We all know the small village general store which sells cigarettes, groceries, ironmongery, clothing, newspapers, indeed practically everything one can think of. All the takings go into a single till, with few refinements of bookkeeping. It would really be unthinkable to try to insist on anything more elaborate. For all these reasons, I have little doubt that this type of indirect taxation is, in general, most effectively and economically collected at the wholesale stage.

Although I am no lover of the Purchase Tax, and recognise its defects, I think that its shortcomings have been somewhat exaggerated in recent months. I know that there are anomalies. But whenever one classifies things into categories borderline cases arise which taken in isolation may sound rather absurd. I have come to the conclusion that the most helpful thing that I can do is to simplify the tax and to adjust it to a more sensible pattern. For obvious reasons, violent and abrupt change is not in the interest of trade, but, unfortunately, anything approaching major reform of the tax involves substantial changes, at least in some sectors. Having chosen to grasp this nettle now, I have sought, in the changes I will reveal to the Committee, to leave the structure of the tax in such a shape as to allow any further changes to be made smoothly and with the minimum of disturbance to trade.

Accordingly, I am reducing the number of rates from seven to four by abolishing the 90 per cent. rate, the 50 per cent. rate and the 10 per cent. rate; goods now chargeable at the first two of those rates will be chargeable some at 60 and some at 30 per cent., none being increased. Tax will be lifted altogether from wool cloth, now chargeable at 10 per cent., but clothing made from such cloth will, like other clothing, bear tax


at 5 per cent. I am moving down to the 30 per cent. rate a large selection of goods now chargeable at 60 per cent., including gas and electric appliances, such as washing machines, refrigerators, vacuum cleaners, and so on, cameras, jewellery, musical instruments, to name only a few items.

I am reducing the tax on wallpaper and garden furniture from 30 per cent. to 15 per cent., on ties and other minor articles of apparel from 30 per cent. to 5 per cent., and on hats from 10 per cent. to 5 per cent. I am also bringing the tax on hall furniture, office furniture and metal furniture, at present 15 per cent., into line with the tax on other furniture at present 5 per cent.

I am withdrawing certain exemptions, mostly of minor importance, which have proved anomalous, including, I will tell my hon. Friend the Member for Kidderminster (Mr. Nabarro), the threads with which one does up stays, about which he asked me the other day, but the only substantial new charge of tax which I propose is on domestic oil heaters. At present, they are tax-free while gas and electric heaters and fires are taxed at 60 per cent. In future, all will be taxed alike, at 30 per cent. As a small point, I am proposing to amend the law to make it clear that local government authorities and other bodies whose functions are not primarily commercial must be registered for the purpose of Purchase Tax if they manufacture or process chargeable goods. Last year a decision of the courts raised doubts on the point in some quarters.

The range of articles affected by these reforms is far too extensive for me to attempt to state it comprehensively now. Details will be shown in the White Paper. But with these changes the structure of the tax will be, effectively, a standard rate of 30 per cent. on a wide range of goods, a higher rate of 60 per cent. on a few big revenue producers, notably cars, wireless and television, gramophones and records, and cosmetics; and lower rates of 15 per cent. and 5 per cent. broadly as at present on the more essential domestic and personal articles.

With the exception of the changes affecting greeting cards, calendars, and so forth, where special considerations apply, these changes will be operative from tomorrow. They will cost £30 million this

financial year and £41 million in a full year. I am glad to think that they will make at least a small contribution to holding down the cost of living.

To sum up, the changes which I propose will cost £50½ million this year and £108 million in a full year. This leaves us, subject to the outcome of the present discussions on the financing of our Forces in Germany, with an estimated surplus above the line of £364 million and an estimated deficit overall of £236 million. I think that these are about right.

I hope that the Committee will consider that these measures taken together amount to a not inconsiderable step for ward in simplification and reform. Ther is clearly no room for large relaxations this year, but my proposals do tighten some of the burdens on the taxpayer, as well as improving our fiscal system. They will also, I believe, help to strengthen our economy and, according to the best judgment I can make, should leave it balanced and poised ready to resume a steady rate of expansion just as soon as we can. I have done my best to produce a Budget this year that consolidates what we have gained and which is, at the same time, flexible and forward-looking. I hope that I have succeeded.

CUSTOMS AND EXCISE

1. Entertainments duty

Motion made,
That, subject to subsection (2) of section one of the Entertainments Duty Act, 1958 (which provides for a reduced rate of duty in the case of certain mixed entertainments), the amount of entertainments duty chargeable on any payment for admission to an entertainment given after the third day of May, nineteen hundred and fifty-eight, shall he one third of the amount, if any, by which the total amount of the payment (not excluding the amount of the duty) exceeds one shilling and six pence.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Amory.]

The CHAIRMAN put the Question whereupon forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).

Question agreed to.

The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

2. Wines (Customs)

Motion made, and Question,
That, as from the 16th April, 1458, in the case of wines other than light wines the rates of customs duty (including both the full and the preferential rates) now chargeable, as set out in the Second Schedule to the Finance Act, 1949, shall each be reduced by 12s. per gallon or, in the case of the additional duty chargeable on wine exceeding 42 degrees proof spirit for each degree or fraction of a degree of the excess, by 1s. per gallon.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Amory.]
put and agreed to.

3. Sweets (Excise)

Motion made, and Question,
That, as from the 16th April, 1958, in the case of sweets exceeding 27 degrees proof spirit the rates of excise duty now chargeable as set out in the Third Schedule to the Finance Act, 1949, shall be reduced, in the case of still sweets by 12s. per gallon and in the case of sparkling sweets by 8s. per gallon.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913.—[Mr. Amory.]
put and agreed to.

4. Methyl alcohol (Customs)

Motion made, and Question,
Methyl alcohol, notwithstanding that it is so purified or prepared as to be potable, shall not be chargeable with the customs duties on spirits, nor shall naphtha or any mixture or preparation containing naphtha or methyl alcohol and not containing other spirits; and those articles shall be charged with other customs duties accordingly.—[Mr. Amory.]
put and agreed to.

5. Periods for motor vehicle licences

Motion made, and Question,
That new provision may be made as to the periods for which licences may be taken out under the Vehicles (Excise) Act, 1949, and as to the rate of duty for licences other than annual licences, and may repeal or suspend, or authorise the repeal or suspension of, any provisions which now confer a right to a licence for a particular period, or to a repayment of duty of a particular amount on surrender of a licence for less than a year.—[Mr. Amory.]
put and agreed to.

PURCHASE TAX

6. Purchase tax (rates, etc.)

Motion made, and Question,
That the following changes shall be made in purchase tax with effect, unless otherwise stated, from the sixteenth day of April, nineteen hundred and fifty-eight:—
(1) Subject to the following provisions of this Resolution—

(a) for any charge of tax at 90 per cent. there shall be substituted a charge at 60 per cent.;
(b) for any charge at 60 per cent. or 50 per cent, there shall be substituted a charge at 30 per cent.;
(c) for any charge at 30 per cent. under Group 5 (haberdashery), Group 10 (wallpaper and certain other papers and articles of paper), Group 16 (b) (garden furniture), Group 23 (b) (baskets and other cane or wicker receptacles) or Group 26 (c) (trophy cups, etc.), there shall be substituted a charge at 15 per cent.;
(d) for any charge at 10 per cent. there shall be substituted a charge at 5 per cent.:
Provided that the reduction from 60 per cont. to 30 per cent. shall not apply to tax chargeable under Group 18 (wireless apparatus), to tax chargeable under Group 19 in respect of gramophones, radiogramophones, player pianos, musical boxes and similar instruments, or parts thereof or accessories thereto, or in respect of gramophones records, or to tax chargeable under Group 35 (road vehicles).
(2) There shall be the following additional reductions in the case of the articles mentioned, that is to say,—

(a) in the case of minor articles of apparel and in the case of accessories to apparel of the kind worn on the person, where the rate under Group 5 would be reduced under paragraph (1) above to 15 per cent., it shall instead be reduced to 5 per cent.;
(b) in the case of tissues and fabrics exceeding 12 inches in width, where the rate under Group 7 would be so reduced to 5 per cent., tax shall not be chargeable under that Group;
(c) in the case of calendars, postcards and lettercards and articles of any of the descriptions known as greeting cards, where the rate under Group 25 or 34 would be so reduced to 60 per cent., it shall instead be reduced to 30 per cent.;
(d) in the case of nippers and knives (being toilet requisites), where the rate under Group 31 would be so reduced to 60 per cent., it shall instead be reduced to 30 per cent.;
(e) in the case of baby dusting powders, where the rate under Group 32 would be so reduced to 60 per cent., it shall instead be reduced to 30 per cent.
(3) The following provisions shall have effect as respects furs and fur articles—

(a) for the purposes of any charge to tax or exemption from tax in the case of articles now comprised in Groups 1, 3 and 5 (garments, headgear and haberdashery), rabbit


skin and woolled sheep and lamb skin shall be treated as not being fur skin, and any such articles made wholly or partly of rabbit skin or woolled sheep or lamb skin shall he chargeable with the same tax (if any) as if not so made:
(b) rabbit skin and woolled sheep and lamb skin now chargeable under Group 8 at 50 per cent. shall be chargeable at 5 per cent. (and not at 30 per cent., as provided by paragraph (1) above);
(c) subject to sub-paragraph (a) above, headgear now comprised in Group 3 (g) (babies' wear) and by virtue thereof exempt from tax shall cease to be so, if made wholly or partly of fur skin (including any skin with fur, hair or wool attached) and not merely trimmed with fur skin;
(d) subject to sub-paragraph (a) above, any tax chargeable under Group 5 on insoles made wholly or partly of fur skin (including any skin with fur, hair or wool attached) shall, notwithstanding paragraph (1) above, continue to be chargeable at 30 per cent. (the rate henceforth applicable under that Group to other articles so made).
(4) The following provisions shall have effect as respects furniture and other articles comprised in Group 11—

(a) the rate of 5 per cent. applicable under paragraph (b) of the Group to furniture of a kind used for domestic purposes and comprised in the list there set out shall apply also to furniture so comprised of a kind used for office purposes, and the list shall be extended so as to include articles named in the list but now excluded as made of metal, and so as to name hat, coat and umbrella stands and racks; and
(b) the following articles shall be exempt from tax, namely,—

(i) draught excluder strip; and
(ii) water filters designed to remove bacteria and other suspended impurities from drinking water by mechanical means but not including filters also employing chemical reaction.
(5) The following provisions shall have effect as respects appliances and apparatus of a kind used for domestic purposes and now comprised in Group 12—

(a) tax shall be chargeable at 30 per cent. in respect of the following articles, including those now exempt from tax, that is to say, in respect of oil burning space heaters (including heaters of a kind used for cooking or boiling and also for space heating, but not including furnaces for central heating systems or hot water systems), but oil burners for such space heaters, if not suitable for use separately, shall be exempt from tax;
(b) appliances of the sort described in paragraph (f) of the Group (which relates to certain heating appliances incorporating electric fans or electric pumps or both) shall cease to be exempt from tax if otherwise electrically operated or if operated by gas;
(c) tax shall be chargeable at 30 per cent. in respect of cabinets, bases, covers, tables and stands for sewing machines.

(6) Notwithstanding anything in paragraph (1) or (2) above, any tax chargeable in respect of the following articles shall be chargeable at 30 per cent., namely,—

(a) hair pins, hair grips, hair curlers, dress combs, hair slides and similar articles;
(b) beads, sequins and similar articles;
(c) buttons, including shapes and moulds therefor, cuff inks and studs;
(d) hat-pins;
(e) tie-pins, tie-retainers, scarf rings, scarf holders, and similar articles,
and the exemption in Group 5 for pins of base metal shall no longer extend to hat-pins or tie-pins.
(7) Tax shall also be chargeable at 30 per cent. in respect of grass boxes for lawn mowers.
(8) The following articles, so far as they are now comprised in the provision mentioned in relation to them and by virtue thereof exempt from tax, or not chargeable under the Group in question, shall cease to be so, that is to say.—

(a) Footwear, the following:—

(i) protective boots designed for use by miners or quarrymen or moulders (Group 2 (b));
(ii) clogs and other wooden-soled footwear (Group 2 (c));
(b) Headgear, the following:—

protective helmets designed for use by miners or quarrymen (Group 3 (c));

(c) Haberdashery, the following:—

(i) laces of a kind used for fastening garments or footwear (Group 5 (f));
(ii) insoles (Group 5 (i));
(d) Trunks, bags, wallets, jewel cases, pouches, purses, suit cases, attaché cases, baskets and similar receptacles of a kind used for personal or domestic purposes (whether fitted or not), the following:—

(i) document, folio, despatch or brief cases (Group 23 (c));
(ii) shopping-baskets and shopping bags (Group 23 (e)).
9. In the case of calendars, postcards and lettercards, and of articles of any of the descriptions known as greeting cards, no reduction of tax for which provision is made above shall take effect until such date as Parliament may determine.
The changes in purchase tax for which provision is made by this Resolution shall be subject to any Order of the Treasury made after the passing of any Act giving effect to this Resolution under section twenty-one of the Finance Act, 1948, as amended by any subsequent enactment.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Amory.]
put and agreed to.

7. Purchase tax (meaning of "business")

Motion made, and Question,
That provision shall be made for extending the meaning of the expression "business" for the purposes of purchase tax, and in particular for treating the performance by a local authority of the functions of the authority, and the carrying out by any other body of persons of the objects of that body, as constituting and as having at all times constituted a business for those purposes.—[Mr. Amory.]
put and agreed to.

INCOME TAX

8. Income tax (charge for 1958–59)

Motion made, and Question,
That income tax for the year 1958–59 shall be charged at the standard rate of eight shillings and sixpence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess as Parliament may hereafter determine.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Amory.]
put and agreed to.

9. Income tax (surtax rates for 1957–58)

Motion made, and Question,
That income tax for the year 1957–58 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1956–57.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Amory.]
put and agreed to.

10. income tax (personal reliefs)

Motion made, and Question,
That—

(a) in section thirteen of the Finance Act. 1957 (relief for persons over sixty-five with small incomes)—

(i) for the references to two hundred and fifty pounds and four hundred pounds (which refer to the income limits for exemption under that section) there shall be substituted references to two hundred and seventy-five pounds and four hundred and forty pounds respectively; and
(ii) for the reference to fifty pounds (which refers to the excess over those limits by reference to which relief under that section by reduction of tax is limited) there shall be substituted a reference to fifty-five pounds;


(b) in subsections (2) and (3) (old age relief) of section two hundred and eleven of the Income Tax Act, 1952, for the references to seven hundred pounds (which refer to the income limit for the full relief under subsection (2)) there shall be substituted references to eight hundred pounds;
(c) in section two hundred and sixteen of the Income Tax Act, 1952 (dependent relatives), for the references to one hundred and sixty-five pounds and one hundred and five pounds (which refer to the income of the dependent relative) there shall be substituted respectively references to one hundred and ninety-five pounds and one hundred and thirty-five pounds;

but paragraphs (a) and (b) of this Resolution shall not require any change to be made in the amounts deducted or repaid under section one hundred and fifty-seven (pay as you earn) of the Income Tax Act, 1952, before the twenty-second day of June, nineteen hundred and fifty-eight.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Amory.]
put and agreed to.

11. income tax (dividends paid out of accumulated profits)

Motion made, and Question,
That provision shall be made (including provision as respects past years of assessment) for amending the law as to the circumstances in which—

(a) certain dividends are to be treated as paid out of accumulated profits;
(b) dividends so paid are to be brought into account as trade receipts which have not borne tax;
(c) exemptions from tax are not to apply to dividends so paid;
and for restricting relief for losses by repayment of tax in the case of tax on dividends so paid.—[Mr. Amory.]
put and agreed to.

12. Income tax (settlements)

Motion made, and Question,
That new provisions shall be made as to the circumstances in which income arising under a settlement or sums payable by a settlor or the wife or husband of a settlor are to be treated under section four hundred and four of the Income Tax Act, 1952, as income of the settlor and not as income of any other person (and are to be so treated for surtax purposes for the year 1957–58 as well as subsequent years of assessment) and for removing with retrospective effect doubts as to the settlements to which that section and section four hundred and five of that Act apply.—[Mr. Amory.]
put and agreed to.

13. Income tax (incidental charges)

Motion made, and Question,
That for the purposes of any Act of the present Session relating to finance it is expedient to authorise all such incidental charges to income tax (including charges for past years of assessment) as may result—

(a) from any provision extending the limits of time within which certain applications, claims, elections or payments may be made or notices given;
(b) from any provision exempting from liability to income tax pensions payable to or in respect of persons who have served as officers to whom the Overseas Service Act, 1958, applies, so far as they are payable to persons resident outside the United Kingdom.—[Mr. Amory.]

put and agreed to.

THE PROFITS TAX

14. Profits tax (alteration of rate and basis of charge)

Motion made, and Question put:—
That, as respects chargeable accounting periods ending after the beginning of April, nineteen hundred and fifty-eight, the profits tax chargeable on the profits of any trade or business shall be of an amount equal to ten per cent. of the profits, and there shall be no relief for non-distribution or distribution charge; and provision may be made, in connection with the changes authorised by this Resolution, as to the amounts to be taken into account as distributions for chargeable accounting periods earlier than those above mentioned.—[Mr. Amory.]

The Committee divided: Ayes 300, Noes 224.

Division No. 85.]
AYES
[5.20 p.m.


Agnew, Sir Peter
Crowder, Petre (Ruislip—Northwood)
Harvey, John (Walthamstow, E.)


Allan, R. A. (Paddington, S.)
Cunningham, Knox
Harvie-Watt, Sir George


Alport, C. J. M.
Currie, G. B. H.
Hay, John


Amery, Julian (Preston, N.)
Dance, J. C. G.
Head, Rt. Hon. A. H.


Amory, Rt. Hn. Heathcoat (Tiverton)
Davidson, Viscountess
Heaid, Rt. Hon. Sir Lionel


Anstruther-Gray, Major Sir William
D'Avigdor-Goldsmid, Sir Henry
Heath, Rt. Hon. E. R. G.


Arbuthnot, John
Deedes, W. F.
Henderson, John (Cathcart)


Ashton, H.
Digby, Simon Wingfield
Hesketh, R. F.


Astor, Hon. J. J.
Dodds-Parker, A. D.
Hicks-Beach, Maj. W. W.


Atkins, H. E.
Donaldson, Cmdr. C. E. McA.
Hill, Rt. Hon. Charles (Luton)


Baldock, Lt.-Cmdr. J. M,
Doughty, C. J. A.
Hill, Mrs. E. (Wythenshawe)


Baldwin, A. E.
Drayson, G. B.
Hill, John (S. Norfolk)


Balniel, Lord
du Cann, E. D. L.
Hinchingbrooke, Viscount


Barber, Anthony
Dugdale, Rt. Hn. Sir T. (Richmond)
Hirst, Geoffrey


Barlow, Sir John
Duncan, Sir James
Hobson, John(Warwick &amp; Leam'gt'n)


Barter, John
Duthie, W. S.
Holland-Martin, C. J.


Baxter, Sir Beverley
Eccles, Rt. Hon. Sir David
Holt, A. F.


Beamish, Col. Tufton
Eden, J. B. (Bournemouth, West)
Hope, Lord John


Bell, Ronald (Bucks, S.)
Elliott,R.W.(Ne'castle upon Tyne,N.)
Hornby, R. P.


Bennett, F. M. (Torquay)
Emmet, Hon. Mrs. Evelyn
Hornsby-Smith, Miss M. P.


Bennett, Dr. Reginald
Errington, Sir Eric
Horobin, Sir Ian


Bevins, J. R. (Toxteth)
Erroll, F. J.
Horsbrugh, Rt. Hon. Dame Florence


Bidgood, J. C.
Finlay, Graeme
Howard, Gerald (Cambridgeshire)


Biggs-Davison, J, A.
Fisher, Nigel
Howard, Hon. Greville (St. Ives)


Bingham, R. M.
Fletcher-Cooke, C.
Howard, John (Test)


Birch, Rt. Hon. Nigel
Forrest, G.
Hughes Hallett, Vice-Admiral J.


Bishop, F. P.
Fort, R.
Hughes-Young, M. H. C.


Black, F. P.
Foster, John
Hurd, A. R.


Body, R. F.
Fraser, Hon. Hugh (Stone)
Hutchison, Michael Clark (E'b'gh, S.)


Bossom, Sir Alfred
Fraser, Sir Ian(M'cmbe &amp; Lonsdale)
Hutchison, Sir Ian Clark(E'b'gh,W.)


Boyd-Carpenter, Rt. Hon. J. A.
Freeth, Denzil
Hutchison, Sir James (Scotstoun)


Boyle, Sir Edward
Gammans, Lady
Hylton-Foster, Rt. Hon. Sir Harry


Braine, B. R.
Garner-Evans, E. H.
Iremonger, T. L.


Braithwaite, Sir Albert (Harrow, W.)
Gibson-Watt, D.
Jenkins, Robert (Dulwich)


Bromley-Davenport, Lt.-Col. W. H.
Glover, D.
Jennings, J. C. (Burton)


Brooke, Rt. Hon. Henry
Godber, J. B.
Jennings, Sir Roland (Hallam)


Brooman-White, R. C.
Goodhart, Philip
Johnson, Dr. Donald (Carlisle)


Browne, P. Nixon (Craigton)
Gough, C. F. H.
Johnson, Eric (Blackley)


Bullus, Wing Commander E. E.
Gower, H. R.
Johnson, Howard (Kemptown)


Burden, F. F. A.
Graham, Sir Fergus
Jones, Rt. Hon. Aubrey (Hall Green)


Butcher, Sir Herbert
Grant, W. (Woodside)
Joseph, Sir Keith


Butler, Rt. Hn. R.A.(SaffronWaldon)
Grant-Ferris, Wg Cdr. R. (Nantwich)
Joynson-Hicks, Hon. Sir Lancelot


Campbell, Sir David
Green, A.
Kaberry, D.


Carr, Robert
Gresham Cooke, R.
Keegan, D.


Cary, Sir Robert
Grimond, J.
Kerby, Capt, H. B.


Channon, Sir Henry




Chichester-Clarke, R.
Grimston, Hon. John (St. Albans)
Kerr, Sir Hamilton


Clarke, Brig. Terence (Portsmth, W.)
Grimston, Sir Robert (Westbury)
Kershaw, J. A.


Conant, Maj. Sir Roger
Grosvenor, Lt.-Col. R. G.
Kimball, M.


Cooke, Robert
Gurden, Harold
Kirk, P. M.


Cooper, A E.
Hall, John (Wyoombe)
Lagden, G. W.


Cooper-Key, E. M.
Hare, Rt. Hon. J. H.
Lambton, Viscount


Cordeaux, Lt.-Col. J. K.
Harris, Reader (Heston)
Lancaster, Col. C. G.


Corfield, Capt. F. V.
Harrison, A. B. C. (Maldon)
Langford-Holt, J. A.


Craddock, Beresford (Spelthorne)
Harrison, Col. J. H. (Eye)
Leather, E. H. C.


Crosthwaite-Eyre, Col. O. E.
Harvey, Sir Arthur Vere (Macclsf'd)
Leavey, J. A.




Leburn, W. G
Neave, Airey
Stanley, Capt. Hon. Richard


Legge-Bourke, Maj. E. A. H.
Nicholls, Harmar
Stevens, Geoffrey


Legh, Hon. Peter (Petersfield)
Nicholson, sir Godfrey (Farnham)
Steward, Harold (Stockport, S.)


Lennox-Boyd, Rt. Hon. A. T.
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Steward, Sir William (Woolwich, W.)


Lindsay, Hon. James (Devon, N.)
Noble, Comdr. Rt. Hon. Allan
Stoddart-Scott, Col. Sir Malcolm


Lindsay, Martin (Solihull)
Nugent, G. R. H.
Storey, S.


Linstead, Sir H. N.
O'Neill, Hn. Phelim (Co. Antrim, N.)
Stuart, Rt. Hon. James (Moray)


Lloyd, Rt. Hon. G.(Sutton Coldfield)
Ormsby-Core, Rt. Hon. W. D.
Studholme, Sir Henry


Lloyd, Maj. Sir Guy (Renfrew, E.)
Orr, Capt. L. P. S.
Summers, Sir Spencer


Lloyd, Rt. Hon: Selwyn (Wirral)
Orr-Ewing, Charles Ian (Hendon, N.)
Sumner, W. D. M. (Orpington)


Longden, Gilbert
Page, R. G.
Taylor, Sir Charles (Eastbourne)


Low, Rt. Hon. Sir Toby
Pannel, N. A. (Kirkdale)
Teeling, W.


Lucas, P. B. (Brentford &amp; Chiswick)
Partridge, E.
Temple, John M.


Lucas-Tooth, Sir Hugh
Peel, W. J.
Thomas, Leslie (Canterbury)


McAdden, S. J.
Peyton, J. W. W.
Thomas, P. J. M. (Conway)


Macdonald, Sir Peter
Pickthorn, K. W. M.
Thompson, Kenneth (Walton)


Mackeson, Brig, Sir Harry
Pike, Miss Mervyn
Thompson, R. (Croydon, S.)


McKibbin, Alan
Pilkington, Capt. R. A.
Thorneycroft, Rt. Hon. P.


Mackie, J. H. (Galloway)
Pitman, I. J.
Thornton-Kemsley, Sir Colin


McLaughlin, Mrs. p.
Pitt, Miss E. M.
Tiley, A. (Bradford, W.)


Maclay, Rt. Hon. John
Powell, J. Enoch
Tilney, John (Wavertree)


McLean, Neil (Inverness)
Price, David (Eastleigh)
Turton, Rt. Hon. R. H.


Macleod, Rt. Hn. Iain (Enfield. W.)
Price, Henry (Lewisham, W.)
Tweedsmuir, Lady


MacLeod, John (Ross &amp; Cromarty)
Prior-Palmer, Brig. O. L.
Vane, W. M. F.


Macmillan,Rt.Hn.Harold(Bromley)
Ramsden J. E.
Vaughan-Morgan, J. K.


Macmillan, Maurice (Halifax)
Rawlinson, Peter
Vickers, Miss Joan


Macpherson, Niall (Dumfries)
Redmayne, M.
Vosper, Rt. Hon. D. F.


Maddan, Martin
Remnant, Hon. P.
Wade, D. W.


Maitland, Cdr. J. F. W. (Horncastle)
Renton, D. L. M.
Wakefield, Edward (Derbyshire, W.)


Maitland, Hon. Patrick (Lanark)
Ridsdale, J. E.
Wakefield, Sir Wavell (St. M'lebone)


Markham, Major Sir Frank
Rippon, A. G. F.
Walker-Smith, Rt. Hon. Derek


Marlowe, A. A. H.
Robertson, Sir David
Wall, Patrick


Marples, Rt. Hon. A. E.
Rodgers, John (Sevenoaks)
Ward, Rt. Hon. G. R. (Worcester)


Marshall, Douglas
Roper, Sir Harold
Ward, Dame Irene (Tynemouth)


Mathew, R.
Ropner, Col. Sir Leonard
Watkinson, Rt. Hon. Harold


Maude, Angus
Russell, R. S.
Webbe, Sir H.


Maudling, Rt. Hon. R.
Scott-Miller, Cmdr. R.
Whitelaw, W. S, I.


Mawby, R. L.
Sharples, R. C.
Williams, Paul (Sunderland, S.)


Maydon, Lt.-Comdr. S. L. C.
Shepherd, William
Wilson, Geoffrey (Truro)


Milligan, Rt. Hon. W. R.
Simon, J. E. S. (Middlesbrough, W.)
Wood, Hon. R.


Molson, Rt. Hon. Hugh
Smithers, Peter (Winchester)
Woollam, John Victor


Moore, Sir Thomas
Smyth, Brig. Sir John (Norwood)
Yates, William (The Wrekin)


Morrison, John (Salisbury)
Spearman, Sir Alexander



Mott-Radclyffe, Sir Charles
Speir, R. M.



Nabarro, G. D. N.
Spence, H. R. (Aberdeen, W.)
TELLERS FOR THE AYES


Nairn, D. L. S.
Spens, Rt. Hn. Sir P. (Kens'g'n, S.)
Mr. Oakshott and Mr. Wills




NOES


Ainsley, J. W.
Cove, W. G.
Grey, C. F.


Albu, A. H.
Craddock, George (Bradford, S.)
Griffiths, David (Rother Valley)


Allaun, Frank (Salford, E.)
Cronin, J. D.
Griffiths, Rt. Hon. James (Llanelly)


Allen, Arthur (Bosworth)
Crossman, R. H. S.
Griffiths, William (Exchange)


Anderson, Frank
Cullen, Mrs. A.
Hale, Leslie


Baird, J.
Dalton, Rt. Hon. H.
Hall, Rt. Hn. Glenvil (Colne Valley)


Balfour, A.
Darling, George (Hillsborough)
Hamilton, W. W.


Bellenger, Rt. Hon. F. J.
Davies, Ernest (Enfield, E.)
Hannan, W.


Benson, Sir George
Davies, Harold (Leek)
Hastings, S.


Beswick, Frank
Davies, Stephen (Merthyr)
Hayman, F. H.


Bevan, Rt. Hon. A. (Ebbw Vale)
Deer, G.
Healey, Denis


Blenkinsop, A.
de Freitas, Geoffrey
Henderson, Rt. Hn. A. (Rwly Regis)


Blyton, W. R.
Delargy, H. J.
Hewitson, Capt. M.


Boardman, H.
Diamond, John
Holman, P.


Bottomley, Rt. Hon. A. G.
Dodds, N. N.
Holmes, Horaoe


Bowden, H. W. (Leicester, S.W.)
Donnelly, D. L.
Houghton, Douglas


Bowles, F. G.
Dye, S.
Howell, Charles (Perry Barr)


Boyd, T. C.
Ede, Rt. Hon. J. C.
Howell, Denis (All Saints)


Braddock, Mrs. Elizabeth
Edwards, Rt. Hon. John (Brighouse)
Hoy, J. H.


Brockway, A. F.
Edwards, Rt. Hon. Ness (Caerphilly)
Hubbard, T. F.


Brown, Rt. Hon. George (Belper)
Edwards, Robert (Bilston)
Hughes, Emrys (S. Ayrshire)


Brown, Thomas (Ince)
Edwards, W. J. (Stepney)
Hughes, Hector (Aberdeen, N.)


Burke, W. A.
Evans, Albert (Islington, S.W.)
Hunter, A. E.


Burton, Miss F. E.
Evans, Edward (Lowestoft)
Hynd, H. (Accrington)


Butler, Herbert (Hackney, C.)
Finch, H. J.
Hynd, J. B. (Attercliffe)


Butler, Mrs. Joyce (Wood Green)
Fletcher, Eric
Irvine, A. J. (Edge Hill)


Callaghan, L. J.
Foot, D. M.
Irving, Sydney (Dartford)


Castle, Mrs. B. A.
Forman, J. C.
Isaacs, Rt. Hon. G. A.


Champion, A. J.
Fraser, Thomas (Hamilton)
Janner, B.


Chapman, W. D.
Gaitskell, Rt. Hon. H. T. N.
Jay, Rt. Hon. D. P. T.


Chetwynd, G. R.
Gibson, C. W.
Jeger, George (Goole)


Clunie, J.
Gooch, E. G.
Jeger,Mrs. Lena(Holbn &amp; St.Pncs.S.)


Coldrick, W.
Gordon Walker, Rt. Hon. P. C.
Jenkins, Roy (Stechford)


Collick, P. H. (Birkenhead)
Greenwood, Anthony
Johnson, James (Rugby)


Collins, V. J. (Shoreditch &amp; Finsbury)
Grenfell, Rt. Hon. D. R.
Johnston, Douglas (Paisley)







Jones, David (The Hartlepools)
O'Brien, Sir Thomas
Steele, T.


Jones, Jack (Rotherham)
Oliver, G. H.
Stewart, Michael (Fulham)


Jones, J. Idwal (Wrexham)
Oram, A. E.
Stonehouse, John


Jones, T. W. (Merioneth)
Orbach, M.
Stones, W. (Consett)


Key, Rt. Hon. C. W.
Oswald, T.
Strachey, Rt. Hon. J.


Lawson, G. M.
Owen, W. J.
Strauss, Rt. Hon. George (Vauxhall)


Ledger, R. J,
Padley, W. E.
Stross,Dr.Barnett(Stoke-on-Trent,C.)


Lee, Frederick (Newton)
Paling, Rt. Hon. W. (Dearne Valley)
Summerskill, Rt. Hon. E.


Lee, Miss Jennie (Cannock)
Paling, Will T. (Dewsbury)
Swingler, S. T.


Lewis, Arthur
Pannell, Charles (Leeds, W.)
Sylvester, G. O.


Lindgren, G. S.
Pargiter, G. A.
Taylor, Bernard (Mansfield)


Lipton, Marcus
Parker, J.
Thomas, George (Cardiff)


Mabon, Or. J. Dickson
Parkin, B. T.
Thomas, Iorwerth (Rhondda, W.)


McAlister, Mrs. Mary
Paton, John
Thomson, George (Dundee, E.)


McCann, J.
Pearson, A.
Thornton, E.


MacColl, J. E.
Peart, T. F.
Timmons, J.


MacDermot, Niall
Pentland, J.
Tomney, F.


McGhee, H. G.
Prentice, R. E.
Ungoed-Thomas, Sir Lynn


McInnes, J.
Price, Philips (Gloucestershire, W.)
Usborne, H C.


McKay, John (Wallsend)
Probert, A. R.
Watkins, T. E.


McLeavy, Frank
Proctor, W. T.
Weitzman, D.


MacPherson, Malcolm (Stirling)
Pursey, Cmdr. H.
Wells, Percy (Faversham)


Mahon, Simon
Randall, H. E.
Wells, William (Walsall, N.)


Mallalieu, E. L. (Brigg)
Redhead, E. C.
Wheeldon, W. E.


Mallalieu, J. P. W. (Huddersfd, E.)
Reeves, J.
White, Mrs. Eirene (E. Flint)


Mann, Mrs. Jean
Reid, William
Wigg, George


Marquand, Rt. Hon. H. A.
Rhodes, H.
Wilcock, Group Capt. C. A. B.


Mason, Roy
Robens, Rt. Hon. A.
Williams, David (Neath)


Mellish, R. J.
Robinson, Kenneth (St. Pancras, N.)
Williams, Rt. Hon. T. (Don Valley)


Messer, Sir F.
Ross, William
Williams, W. T. (Barons Court)


Mikardo, Ian
Royle, C.
Willis, Eustace (Edinburgh, E.)


Mitchison, G. R.
Shinwell, Rt. Hon. E.
Wilson, Rt. Hon. Harold (Huyton)


Monslow, W.
Short, E. W.
Winterbottom, Richard


Moody, A. S.
Silverman, Julius (Aston)
Woodburn, Rt. Hon, A.


Morris, Percy (Swansea, W.)
Silverman, Sydney (Nelson)
Woof, R. E.


Morrison, Rt.Hn.Herbert(Lewis'm,S.)
Simmons, C. J. (Brierley Hill)
Yates, V. (Ladywood)


Mort, D. L.
Slater, Mrs. H. (Stoke, N.)
Zilliacus, K.


Moss, R.
Slater, J. (Sedgefield)



Moyle, A.
Snow, J. W.
TELLERS FOR THE NOES


Mulley, F. W.
Soskice, Rt. Hon. Sir Frank
Mr. G. H. R. Rogers and


Noel-Baker, Rt. Hon. P. (Derby, S.)
Sparks, J. A.
Mr. J. T. Price.


Whereupon Motion made, and Question, That the CHAIRMAN do report Progress and ask leave to sit again—[Mr. Gibson-Watt]—put and agreed to.

15. Profits tax (miscellaneous charges)

Motion made, and Question,
That for the purposes of the profits tax it is expedient—

(a) to make further provision, as respects chargeable accounting periods ending after the beginning of April, nineteen hundred and fifty-eight, in relation to groups of companies, statutory undertakers, nationalised industries, industrial and provident societies and building societies, and to persons receiving payments from them; and
(b) to authorise such charges to tax (including charges for past chargeable accounting periods) as may result from amending the law as to the circumstances in which for the purposes of income tax certain dividends are to be treated as paid out of accumulated profits and dividends so paid are to be brought into account as trade receipts which have not borne tax.—[Mr. Amory.]

put and agreed to.

ESTATE DUTY

16. Estate duty (miscellaneous charges)

Motion made, and Question,
That for the purposes of estate duty—

(a) new provision shall be made for charging duty on deaths occurring after 15th

April, 1958, in cases where there is at the death or has previously been in any property an interest limited to cease on the death (or similar interest), and there has after that date been a purchase of or other dealing with an interest expectant on or subject to the interest so limited;
(b) notwithstanding any resulting charge to duty, provision may be made, in lieu of or in addition to any existing provision, for cases in which two or more persons have died within a short period or in circumstances rendering it uncertain which of them survived the other or others, and for cases in which effect is by law given to a testamentary disposition in favour of a person who has not survived the testator, and may apply where any relevant death occurs after 15th April.
(c) section forty-four of the Finance Act. 1921, and the proviso to subsection (2) of section forty of the Finance Act, 1930 (which provide that duty shall not become chargeable on certain sales to national institutions, etc., of works of art or other property previously exempted), and any enactment amending those provisions, shall be amended so that the references to a sale shall not include a sale otherwise than by private treaty.—[Mr. Amory.]

put and agreed to.

STAMP DUTIES

17. Stamp duty on certain agreements

Motion made, and Question,
That certain instruments now chargeable with duty under the heading "Bond, Covenant", or the heading "Mortgage, Bond, Debenture, Covenant" in the First Schedule to the Stamp Act, 1891, shall instead be chargeable under the heading "Agreement or any memorandum of an Agreement" or under the heading "Deed of any kind", and that certain agreements made for or relating to the sale of goods, wares or merchandise shall be chargeable under the heading "Agreement or any memorandum of an Agreement" notwithstanding any exemption under that heading.—[Mr. Amory.]
put and agreed to.

MISCELLANEOUS

18. Tithe annuities (redemption)

Motion made, and Question,
That the limit of amount within which annuities under the Tithe Acts, 1936 and 1951, are compulsorily redeemable shall be extended.—[Mr. Amory.]
put and agreed to.

19. Winding up of Treasury Chest Fund

Motion made, and Question,
That the amount of the available balance of the Treasury Chest Fund as at the end of March. 1958, shall be paid into the Exchequer.—[Mr. Amory.]
put and agreed to.

20. Amendment of Law

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance.—[Mr. Amory.]

5.32 p.m.

Mr. Hugh Gaitskell: I rise in accordance with our usual custom to offer on behalf of the whole Committee our congratulations to the right hon. Gentleman the Chancellor of the Exchequer on surviving his first ordeal in presenting a Budget. That it is an ordeal, as one of his six predecessors who are Members of the House, I can certainly testify. I do not know whether the presence of five of those predecessors made it an even greater ordeal; perhaps that depends to some extent on whether one regards their presence here as merely a matter of longevity or the result of moving on very fast from the office which he now holds.
The right hon. Gentleman, whose courtesy and modesty always commend them

selves to the House, gave us a typical speech in which the rather heavier elements, inevitable in a Budget presentation, were livened and lightened by frequent flashes of humour, and for that we are indeed most grateful. He presented a Budget which contains a large number of small elements. Many of these are welcome to us. We see no objection, not even the ex-Chancellors on this side of the Committee, to the bringing to an end of the Treasury Chest. We certainly welcome the tightening up of the law against tax evasion. We ourselves, I think, warned the right hon. Gentleman's predecessor that the proposals to deal with dividend stripping were not adequate and that further legislation would be necessary. We are glad that he is making that new legislation retrospective.
Although I am bound to say that I cannot see that there is a very strong case for lightening the duty on heavy wines, I do not feel myself disposed to object very strongly to it. I am sure it has the blessing of the Lord Privy Seal with his well-known taste for port wine, and those who like that particular form of alcohol will, no doubt, be very grateful to the right hon. Gentleman.
We certainly agree with the Chancellor that it is necessary to do something about the Entertainments Duty. We shall naturally wish to study with care the specific proposals that he has made, but that they are in the right direction certainly cannot be questioned if the cinema industry is to survive in this country.
As to Purchase Tax, we on this side of the Committee are glad that the right hon. Gentleman has rejected, and in such forthright language, the idea of a general sales tax. It has always seemed to us that such a tax, apart from being almost, one might say, impractical, would also be unfair. It would, in fact, involve increasing or imposing taxation on many necessities of life in order to reduce taxation upon luxuries. That, to us, seems to be exactly the wrong way to go about taxation. We are glad, too, that the Chancellor defended the present system of collecting Purchase Tax. I am sure that his predecessors would agree with him that all experience shows that an attempt to collect it at the retail stage would be extremely difficult if not impossible.
I come now to one proposal which the right hon. Gentleman has made and


which I am afraid we cannot greet with any enthusiasm at all, and against which we have just voted. He has decided to amalgamate the two rates of Profits Tax and to end the discrimination in favour of reserves and against dividends. In our opinion, this is a mistaken move on his part. We believe that this must inevitably encourage the payment of larger dividends and, therefore, encourage consumption at a point in the economy when it is certainly least necessary and least deserved, and at the same time it is bound to have a deterrent effect on the accumulation of company reserves and the promotion of company saving.
It is quite correct that the majority of the Royal Commission on Taxation of Profits and Income recommended that the rates should be amalgamated. I do not propose this afternoon to rehearse or criticise the arguments which they put forward in that connection. The minority, it is true, also made a recommendation of this kind, but it was coupled with something to which the right hon. Gentleman has not referred at all in his Budget speech, namely the introduction of a capital gains tax. Had he come forward with a proposal of that kind, we might have taken a slightly different attitude. As it is, we feel that this move is really counter to the general impression which he created of what he wanted to do, and we very much regret that he has seen fit to do it.
It is my desire to speak for only a few moments today. In accordance with our usual custom, my right hon. Friend the Member for Huyton (Mr. H. Wilson) will develop tomorrow our main criticisms and comments upon the right hon. Gentleman's Budget, and no doubt deal with the economic situation as a whole. Before I sit down, however, I should like to make a brief reference to what seem to me to be the fundamental issues which face our country in the economic field at the present time. The right hon. Gentleman was at pains to emphasise that he was in favour of industrial expansion. He referred to the necessity of a temporary pause. It is becoming a rather long pause. Production is today very little above what it was two-and-a-half years ago. We have had, with some downs and some ups, virtual stagnation in this field for that period of time.
Moreover, we are undoubtedly faced today with a much less favourable em-

ployment situation than we have had, at any rate, for the past five or six years. The right hon. Gentleman admitted that unemployment had increased. He did not say—I know he would admit it—that the number of persons seeking work today is twice the number of vacancies available, and if this process goes on very much longer, the situation will indeed become serious.
Quite apart from the numbers actually out of work, we have had a reduction in overtime and a very substantial increase in short-time working. I submit that in the face of this, in the face of the fact that there has been virtually no increase in production in the past two-and-a-half years, and that there has nevertheless been some increase in investment, there is very good ground for believing that there is spare capacity in our economy today, and we believe that it is unfortunate, to say the least, that the right hon. Gentleman should have been content apparently, judging by what he said, to allow production even to fall further this year, and certainly not to put forward any plans for its expansion. I beg him to realise how serious this must be for our economy and, indeed, for our community as a whole.
The right hon. Gentleman made little reference—indeed, practically no reference—to the wage problem which exists today. It is true that he made a brief appeal that wages should not rise faster than productivity. What is the good of making an appeal of that kind, whether it be to private enterprise or to the publicly owned industries, when the Government's own policy is making it impossible for production and productivity to rise? Surely, the right hon. Gentleman must agree that we cannot consider this problem of wages apart from productivity. If productivity is rising, we can have rising wages, but if it is stagnant or indeed falling, we may have a very serious position developing in terms of labour costs, even though wages rise not at all or only slightly.
We feel, therefore, looking at this Budget as a whole, that the right hon. Gentleman has missed a very great opportunity, because he is still clinging to the same kind of ideology which his immediate predecessor was at pains to put across. He believes that the only way of dealing with the problem of rising prices and the only way of stabilising the cost


of living is by restriction, by cutting back, by keeping production down and preventing it from rising. On the contrary, we believe that all the experience of the last two or three years shows that even where there has been restriction, it has not prevented prices rising.
We believe that it would have been a wiser policy at this stage to encourage an increase in productivity and to try to reach agreement or arrangements with the trade unions in a better atmosphere and on a basis of policies which they can support, which would ensure that wages do not get hopelessly out of step with productivity. It is the right hon. Gentleman's failure to grasp that point and to follow policies which accord with it which we feel is most serious.
In that connection, I must mention one other point. We are all aware of the dangerous situation which is developing in the transport industry. None of us here wishes to see a strike. We should all like to see this business settled. We realise that the situation is delicate, and none of us would wish to say anything which might in any way create difficulties, but we were expecting and hoping that the Chancellor of the Exchequer, by this Budget, and by what he said, would make easier a settlement in the industry. I cannot honestly say that he has done so.
It was open to him today to take one simple step which I should have thought was not very difficult, in the light of the fact that he has given a certain amount away and of the fact that there is some slack in the economy. He could have allowed the British Transport Commission to go full steam ahead with its investment programme. He could have made possible a rise in productivity, which he himself says he wants in industry, and that at least would have been a gesture which might have made easier a settlement of this exceedingly difficult dispute.
I end as I began. With all sincerity I offer my congratulations to the right hon. Gentleman. I have had the pleasure of knowing him for a good many years, and, like most hon. Members, I appreciate his personal qualities. I very much regret that they could not have been used in support of a Budget which would have been more appropriate to the circumstances of the nation.

5.43 p.m.

Mr. Eric Johnson: It is once again my good fortune to be the first hon. Member on this side of the Committee to catch your eye, Sir Gordon. to add my congratulations to those of the Leader of the Opposition to the Chancellor of the Exchequer on his Budget speech. I think I have been the first hon. Member on this side of the Committee to congratulate three of the previous six Chancellors to whom the Leader of the Opposition has referred, and I can only say that my right hon. Friend has fully lived up to the standard of those of his predecessors whom I have had the privilege of hearing making their Budget speeches.
My right hon. Friend has spoken with a clarity and lucidity which made it easy to follow what inevitably was a long and complicated statement, and I can have nothing but praise—and I am sure that the rest of the Committee is with me in this—for the way in which he presented his Budget. I think there will be very few people who will disagree with its contents.
If my right hon. Friend is right in sharing the opinion expressed in the second paragraph of the Economic Survey that one result of the successful measures taken by the Government to meet the threat to our economy last autumn was the growing public understanding of the country's economic difficulties, there can have been very few people who expected very much in the way of tax reductions in this Budget. I think it was generally agreed that we cannot afford to take any risks until we are safely through the summer and autumn, and that is all the more the case when so much depends on the future course of the business recession in the United States. Of course, another obvious reason for caution is that there is always an increased strain on our reserves in the summer and late autumn.
Despite these facts, it did seem that my right hon. Friend would have some small margin for tax reduction, and for my part I had hoped that he would apply this margin in such a way that the benefits would be most widely felt and so that they would assist those industries in which unemployment is above the national average.
For that reason, I am bound to say that I regret that it has not been possible to have some reduction in the tax on petrol and diesel oil. This seems to be a case in which the benefits would be very widely felt, because everything we buy and use is affected in some way or another by transport costs, and if it had been possible to bring down that tax in some small degree, I think that prices generally might have been able to be reduced.
I am sure that everyone will welcome what my right hon. Friend has done about Income Tax. Last year, it was those at the top end of the scale who got some benefit, and I think it is only fair that those at the bottom, and especially the old people, should have benefited this time. It is difficult to take in all the other tax changes as one listens to a Budget speech, and beyond saying that I welcome very much the proposal whereby Estate Duty is to be altered in the case in which two people die together, I do not propose to make any further comment on that aspect of the Budget speech.
There is no doubt that the cinema industry has been faced with increasing difficulties over many years, and we all felt that there was a very strong case for a reduction in Entertainments Duty. For my part, I had hoped that my right hon. Friend would be able to go the whole way and abolish the duty altogether, but the reduction he has made is, at any rate, a relief which is very badly needed. Cinema attendances dropped by no less than 22½ per cent. in the last quarter of 1957, as compared with the corresponding period of 1956.
The result of this has been that out of the 4,100 or so cinemas in the country, a very great many—more than a quarter—are operating at a loss after paying Entertainments Duty. Indeed, 417 were forced to close altogether during the past few years. I hope my right hon. Friend has done enough. It is perhaps not generally appreciated that the cinema industry makes a valuable contribution to our exports. It earned £3 million in the last year in foreign exchange, and it is also a valuable means of propaganda in displaying our way of life to other countries and thereby it earns our country a great deal of goodwill. It is undoubtedly threatened by the closure of cinemas, because it can-

not export unless it has a fairly strong home market. I can only say that I hope that what my right hon. Friend has done will be enough.
In general, I firmly believe that the benefit of a concession of this kind should be passed on to the customer, but, in this case, I feel that people must not expect, at any rate in the small cinemas, to reap an advantage by paying less for their seats. It is not a matter of paying less to go in, but of whether the small cinemas can keep open at all. I hope that, with this reduction in the duty, they will be able to.
One would have to study the proposals about Purchase Tax with more time at one's disposal than I have had before making very many comments. Obviously, there was a strong case for doing something, if only to remove the many anomalies which undoubtedly existed. There was one anomaly to which I had intended to draw attention, namely, the tax on wallpaper. Wallpaper was omitted last year from the changes which applied to similar products, and it is, I believe, the only interior decorating material subject to Purchase Tax at all. The tax has now been reduced from 30 per cent. to 15 per cent., which will be very welcome in the industry, but I still believe that wallpaper will be at a disadvantage compared with other materials which compete with it in supplying a similar need.
I referred to industries where unemployment was above the national average. Two which I had particularly in mind were furniture and textiles. As regards furniture, there has been a very big fall in sales ever since 1954. This has been due not to any lack of demand for furniture, but to the restrictions on hire purchase and the abolition of what is known as the "add to" agreement in the furniture trade. My right hon. Friend said that he was sorry that the hire-purchase restrictions would have to be maintained, and I regret that he should have felt this to be necessary. When all is said and done, hire-purchase transactions account for only about 3 per cent. of total consumer expenditure, and a little relaxation to help the furniture trade would not really have been very inflationary.
It has for many years been an accepted method in the furniture trade more than


in any other trade to buy on the hire-purchase system. It has undoubtedly helped people to buy furniture who could not otherwise afford it, and it has helped many young married couples to furnish their houses. I should have hoped that my right hon. Friend would have been able to do something. Undoubtedly, immediately after the restrictions were imposed—an initial deposit of 15 per cent. in 1955, increased to 20 per cent. in 1956, and the prohibition of the "add to" agreement—there was a very marked fall in the sale of furniture. It would be a very great help if the initial deposit, if it cannot be abolished altogether, could at any rate be reduced to 10 per cent.
As regards cotton, the industry could be helped, though, I admit, in only a small way, in the export of cotton yarn to Eastern Germany. This matter was discussed in the House not very long ago. My right hon. Friend referred to the need to foster the export trade, and there seems to be here a very simple way of doing it, at any rate to a small extent. Trade in cotton with Eastern Germany today is largely in the very valuable double yarn, but we are in a position of special difficulty because we are about the only potential suppliers who have not a trade agreement with Eastern Germany. The result is that the East Germans say that they must divert business to those countries with which they have, by their agreements, a quota to fill, or they say that they may have to spend money in putting in textile machinery of their own if they cannot get enough from us.
The trade with Eastern Germany is particularly valuable because there is no doubling machinery in the Eastern zone. When the doubling machinery was installed in what is now the Federal Republic of Germany, imports from this country were immediately confined to single yarn, and this deprived British cotton operatives in the doubling branch of a good deal of employment. I understand that the East Germans are prepared to take something like 2 million lbs. or more of double yarn a year from us, which would provide employment for about 800 people in Lancashire. I do not think that we shall get that business unless we have a trade agreement.
I am, of course, well aware that we do not recognise the Government of

Eastern Germany, and I am not suggesting that we should. But we are not alone in not recognising the East German Government, though we are virtually alone in having no trade agreement. There is no need for a formal agreement between Governments; there might be some informal arrangement made, or an agreement between unofficial bodies like the Federation of British Industries and the East German Chamber of Trade. It seems that another obstacle is the fact that the East Germans want a trade office in this country and we will not let them have it. Last May, my right hon. and learned Friend the Foreign Secretary said that this was because we did not recognise their Government. If it is all right, as was said by my hon. Friend the Parliamentary Secretary to the Board of Trade recently, for the Federation of British Industries to negotiate with the East German Chamber of Trade, I cannot understand why it should be very wrong for the East Germans to open a trade office here. It seems to me rather like cutting off one's nose to spite one's face to say that they may not have a trade office because we do not like their Government if we are to lose a good deal of business and lose the opportunity of providing some employment in Lancashire.
I would like to make a few brief observations about the economic situation in general and more particularly about the report of the Cohen Committee. The Cohen Report has come in for a good deal of criticism, much of it, in my view, quite unfair. Indeed, some of the criticism suggested either a wilful misunderstanding of the Report or a very sketchy reading of it by the critics. In paragraphs 15 and 16 of the Report it is said that the post-war years have been years of economic progress in the United Kingdom, and the economy has provided jobs for all who wanted them, the actual quantity of goods produced rising in every year but two. But, we are told, there has been one big failure,
the failure to prevent prices from rising".
Prices have risen steadily, as we all know, ever since 1945.
Leaving out the question of the cost of our imported raw materials, I believe, quite frankly, that each one of us knows in his heart of hearts what should be done. Perhaps it is an over-simplification,


but, surely, the solution is to increase productivity while increasing neither dividends nor wages, and to pass on the benefit of increased productivity to the customer through lower prices. We all agree about that, but the trouble is that everyone seems to wait for somebody else to do it first. Indeed, sometimes people do not even wait. On whatever side of industry they may be, they say, "Let us get in and get ours first, and then it will be all right". This attitude is rather like the attitude of the Soviet Union on the stopping of tests of nuclear weapons.
Lord Cohen said the other clay that his Committee had been accused of being hard on wages and soft on profits. He maintained that the policies which the Committee recommended would hit profits harder than wages. It is true that paragraph 140 of the Report states—and this paragraph has come in for some criticism—that the Committee hoped that
if any wage increases are granted in 1958, they will be substantially
lower than those of the past few years. However, I would remind the Committee that, despite the fact that dividends, even before tax, have less than doubled since 1938 while wages and salaries have increased fourfold, the Cohen Committee also said:
The economy … might be in a healthier position if there were a greater diffusion of real income from the company qua company not merely to its shareholders … but to its customers".
Those two statements seem to mean that it would be much better to devote the benefits of greater technical efficiency and productivity in business to reducing prices rather than to passing on those benefits in either increased wages or increased dividends. I believe that that applies equally to the nationalised industries. I am convinced that in the long run such a policy would benefit both the shareholders and the wage earners. It would benefit them immediately as consumers.
I am afraid that that policy does not always seem to commend itself to some of the largest of our great companies. I noticed that both this year and two years ago two very large companies not only increased their dividends—and I do not criticise them for doing that—but made an issue of bonus shares just before the Budget. These are two very good companies, and they are good employers.

Far be it from me to tell the management of those companies how to run their affairs. But action of this kind is not altogether calculated to encourage restraint in making wage claims. On the other hand, in defence of these companies, they may possibly be influenced—in one instance, at any rate—by the threats of the party opposite to take over control of about 500 large firms if they get into office, and they may have yielded, not unnaturally, to the temptation of making hay while the sun shines.

Mr. Thomas Hubbard: To follow the hon. Gentleman's argument, will he make clear to which companies he is referring?

Mr. Johnson: Yes, I am perfectly willing to do that. It applies to Shell Transport two years ago and to Imperial Chemical Industries this year. I did not want to mention them by name, but anyone can obtain the information by looking them up in the newspaper. The company has a large factory in my constituency which is doing very well and employing a great deal of labour. It has the reputation of being a very good employer indeed and, furthermore, it has given a fairly large issue of shares to its employees. I do not criticise the company. I say that, in my view, that is not the best way to encourage people not to make wage claims.
The Government policy to deal with the economic situation last autumn came in for a good deal of criticism at the time. But it has in my view—and I think that what the Chancellor has said has demonstrated this—gone a very long way towards achieving its object. No one would deny that confidence in sterling has been restored, and there has also been a very satisfactory increase in our reserves. The second paragraph of the Economic Survey to which I referred said that the whole process of strengthening confidence both abroad and at home has to go further if the country is to have a sound foundation for further economic development. I think that is absolutely true, and no one would challenge it.
I believe, therefore, that the Budget must be judged by the extent to which it consolidates the ground which has already been gained and by which it provides a springboard for further progress. When


we look at my right hon. Friend's proposals tomorrow we ought to give less thought to whether they give us more money to spend now by reductions in taxation than to whether they are calculated to let us have better value for the money which we have already by bringing down prices at home and maintaining the stability of our currency abroad. I think that an impartial consideration of my right hon. Friend's Budget proposals would show that they measure up well to those standards, and as such I believe that they will win the commendation not only of the Committee but of the country.

6.7 p.m.

Mr. James H. Hoy: I want to concentrate mainly on one of the announcements made by the Chancellor about the black spots of employment in the country. It is extremely difficult to ask the people of Scotland to increase production when there is an. ever-increasing rise in the numbers of unemployed.
A large meeting was held at the end of last week in the constituency of my hon. Friend the Member for Kirkaldy Burghs (Mr. Hubbard), at which hundreds of people were present, because, once more, the livelihoods of hundreds of men were involved by the action of the Government, who, rightly or wrongly, are closing a very important naval yard. If the Government were interested in increasing production, one would have thought that, before taking the step of closing the yard, at least alternative employment would have been made available for these people.
That is not confined to only one part of Scotland. I am glad that the President of the Board of Trade is in the Committee, because in recent weeks it has been my duty, as the convener of the Employment and Industry Group in the Scottish Parliamentary Labour Party, to take delegations to the Secretary of State for Scotland, the President of the Board of Trade and the Minister of Labour about the ever-growing problem of unemployment in Scotland.
I was interested to hear the Chancellor say that one of the things he intended to do was to make resources available to areas outside those scheduled under the Distribution of Industry Act. During many debates on industrial employment

in Scotland we have asked the representatives of the Government if this could be done, but we have always been repelled with the reply that if we spread the Distribution of Industry Act over more areas it would become less valuable. But I think that the announcement by the Chancellor that the Government are prepared to allow benefits obtainable in certain areas under the Distribution of Industry Act to spread over into areas where there is a particularly heavy employment is a distinct possibility. I think of areas like Dundee, where the unemployment figure has now reached over 5 per cent., Greenock, where unemployment now exceeds 8 per cent., and places in the North, like Stornoway, where unemployment is between 12 and 15 per cent. It will be seen, therefore, that not merely one area, but many areas, in Scotland are vitally interested in this problem.
The Chancellor did not give us a great deal of information when he made his announcement. I ask that the Government to say, not necessarily tonight, but, perhaps, in opening the debate tomorrow——

The President of the Board of Trade (Sir David Eccles): The President of the Board of Trade (Sir David Eccles) indicated assent.

Mr. Hoy: I gather that the President of the Board of Trade will open the debate tomorrow. I hope that he will tell us something more decisive and say that in areas where unemployment is two or three times higher than the level of the rest of Britain, these conditions will obtain. Such an assurance is vital to Scotland. We shall be grateful for any assistance from the Government to deal with this problem.
I join with the hon. Member for Blackley (Mr. E. Johnson) in one of his remarks about Purchase Tax. In view of his desire to create employment, I should have expected the Chancellor to wipe out altogether the tax on wallpaper. This is a commodity which affects those engaged in interior decoration, among whom unemployment is high. Anything that would have helped to reduce costs in this direction would have been of great benefit not only to the wallpaper industry itself, but to that section of building trade workers who, at present, are feeling the pinch of unemployment most sharply. These are the things which


interest us in Scotland and we hope that when the Chancellor winds up our debates next week, he will make his proposals much more specific than they were when presented to us this afternoon.

6.12 p.m.

Mr. Thomas Hubbard: I do not intend at this stage to go into the whole detail of the Chancellor's Budget statement. It certainly requires a good deal of study. During the post-war years the country has felt the need of inspiration. Whatever way we look at today's Budget, nobody can describe it as inspiring. Indeed, nobody will be satisfied with it.
At the present time, when there is already an increasing volume of unemployment, when it would appear that we are on the eve of trouble in industry and at a time when it is essential to increase productivity, everything points to the fact that productivity is bound to go down. It is bound to do so if people are unemployed. Unemployment is never profitable to the country at any time. It grows like a snowball. Nothing which has been said this afternoon gives any indication that the Budget is likely even to stop the growing unemployment. There is, therefore, no inspiration in that direction.
A large number of various trade unions have put in claims for increased wages. I wish that sometimes in this Chamber we would get down to realism when talking about demands for increased wages. What the ordinary people engaged in production want is to maintain their standards. It must be obvious that the Government's deliberate policy of increasing the interest charges means that the money that the workers have been earning, in all industries, buys less. What they are asking for is not better conditions than they have had hitherto, but to be able to maintain the conditions for which they fought so long and which they enjoyed for a short period after the war.
It is not a question of the trade unions wanting to sabotage the country's economy. The shoe is on the other foot. It must have been crystal clear to the Government when they increased the interest rates and passed them on to the local authorities that there would be an increase in rents and rates. A 5s. a week increase in rent is equal to a 5s. reduction

in wages or purchasing power and a further increase of 5s. for rates means yet another 5s. reduction in the value of wages. The only satisfactory method of evaluating an income is to assess the standard of living that it provides. We on this side have made it clear that unless something is done to offset the extra charges falling upon the great bulk of the people, including those in productive industry, they are bound to take the only other step open to them and ask for an increase in wages.
As I see it, the only alternative to increased wages is stabilisation of prices, but not one single part of the Government's policy has been directed towards stabilising prices. During the first six years after the war, we had increases in the cost of living because world prices were going up. We have had even steeper rises during the past six years, in spite of the fact that world prices have been falling. Therefore, when the housewife's money buys less, the only alternative is for wages to rise. This is one direction in which the Government could have given the country a stimulant.

Mr. E. Johnson: I know that the hon. Member would not want to create a false impression, but it is none the less a fact that the real value of earnings is higher today than in 1951, when the party opposite were in power.

Mr. Hubbard: The real value of wages is determined by what people can buy with them. It does not matter whether a worker takes home £5 or £10. The real value is in the amount of commodities that he can purchase. While it is true that the figure in terms of £ s. d. is higher, the purchasing power is no higher. Therefore, the workers are going back——

Mr. Johnson: I understand what the hon. Member means by the level of the value of wages, but is it not a fact that the worker in industry can today buy more with his earnings than when the party opposite were last in power?

Mr. Hubbard: If the hon. Member is referring to the availability of commodities, that may be true. When the Labour Government were in office, commodities were in short supply. Now they are in greater supply. It is, however, incorrect to say that in terms of purchasing power the worker is able to buy sufficient to


live at a higher standard. One has only to inquire of the tradespeople in any town. The greater the proportion of wages that must go in rent and rates, the less there is for people to spend in the shops. The moment that unemployment starts to grow—and we have a large volume of it in Scotland—less and less money goes into the hands of the tradespeople. Fewer replacements are necessary from the factories. That is the position that we now face.
In the same way as the Government have to budget for the future and to raise money, the housewife also has to budget. To ensure that families maintain for themselves and for their children a decent standard of life compels them to seek an increase in wages.

Mr. E. Johnson: Mr. E. Johnson indicated dissent.

Mr. Hubbard: The hon. Member shakes his head. It depends which way he looks at it. It must be remembered also that old-age pensioners have to budget and that the cost of living goes up for them, too, for the same reasons. If the price of coal goes up, the housewife has to pay more for it. If transport charges go up, she has to pay more for her goods because the increase is always passed on to the consumer. That may be all very well for those who gain compensation by ever-increasing increases in income, but it does not benefit those on fixed incomes, the old-age pensioners or those who are sick. Where is there one crumb of comfort for them in the Budget today?
There was much beating of the drum by the Government announcing what they were going to do for the old people. They were going to increase pensions for the old-age pensioners living in welfare homes. They were supposed to be giving them 2s. 6d. more pension to make their pension equivalent to that given to old-age pensioners living at home. However, by the withdrawal of the tobacco concession their net gain is only 2d. a week. I have here a letter from a number of old-age pensioners living in a welfare home at Methilhaven in Fifeshire confirming this. The hon. Member for Blackley (Mr. E. Johnson) and the Government must remember that this welfare home is not a mental institution or a Poor Law institution or a prison, and that the people who live in it are

entitled to live as normal and as decent a life as anybody else. They are not confined; they go out. Because of the rise in the price of commodities which they want to buy when they go out, even if they want to buy entertainment, they are worse off now than they were before. Would the hon. Gentleman say that there is any equity in that? Will he say that this letter is lacking in realism? Does he not realise that the people at the bottom end of the income scale were looking to the Budget for some relief?
Perhaps he does not realise what the position is which we in Fife are facing, where the naval repair works are closing down. Because of that young apprentices were looking for some help from the Budget. They have to leave their homes in Fife to take jobs in the South of England. The Admiralty is prepared to pay apprentices 17s. a week for living away from home. Apprentices have to budget, too. I have an apprentice's budget here. A young apprentice working at Donibristle finds that the only place where he can obtain employment in his own trade is at Fleetlanes in the south of England, and he has to leave his home. A growing boy, he requires replacements of clothes and boots more often than an adult. At the end of the day he finds he is left with only 7s. in his pocket. Was he not entitled to look to this Budget for some help for his future? The whole of our future depends on the future of these boys.
Representing as I do a place where we pay tribute to Adam Smith. I would remind the Committee that the real wealth of the country is its capacity to produce, and any Government who do not make all the efforts they can to keep everyone in production and to encourage production are falling far short of what the country rightly expects of them, and that is what this Government are doing at this time. They are causing loss of production either through the closing down of works or by driving people to strike.
Local authorities also have to budget. They have no way of raising revenue other than through their local taxation, and the people are subject not only to the taxes levied by the Government but to local rates as well. The Government, by their dear money policy, are driving local authorities to increase their revenue by


raising rates in order that they may carry out the functions, for instance in housing, which the Government have placed upon them. Increased rates are further inroads on the standard of living of the people, and they are especially severe in the areas where most has to be done.
There is direct Income Tax; there is local taxation; and there is indirect taxation. Of all the methods of taxation, indirect taxation I find the most abhorrent, and it ought to have been treated differently by the Chancellor of the Exchequer. When we realise that Purchase Tax even on necessary articles is paid by the poorest people at the same rates as are paid by the wealthiest people, then we see that this indirect taxation is the most unfair form of taxation.
The people who put most into the pool ought to be able to take the most out of it. The hon. Member for 131ackley mentioned Imperial Chemical Industries, but I can add the names of other companies which have been paying big dividends. The great Prudential Assurance Company showed a dividend of 150 per cent. just a few weeks ago, and the Pearl Assurance Company and other monopolies have paid great dividends. It is very difficult today to convince people whose standard of life has been reduced because of increased prices or because of Government policy that they ought to be patriotic and accept a lower standard of life and not demand increased wages when day by day they see published the high dividends paid by monopolies and cartels.
Even though I.C.I. may be very good to its workers it takes far too big a share for itself of the profits. It ought to pass on to the consumer more of the profits which it makes out of some of the commodities which it manufactures. Indeed, if the consumers could be advantaged by cheaper prices there would be less and less need for them to demand increased wages.
We want a little clear thinking about the way ahead. I have been on strike in my life. Ordinary people, ordinary workers never benefit from strikes. Nobody goes gladly into a strike, but there comes a time when people have to defend their standard of living. Should there be a strike in the transport industry it will be a disaster for those engaged in

the industry whether on the buses or on the railways. If there were to be a strike in the coal mines it would be a disaster to the people in that industry. A strike would be not only a disaster to the workers but to the country as a whole and to the economy of the country, and at this time we feel—I, at any rate, feel most strongly—that the Government ought to take action to ease the difficulties.
For instance, if the duty on petrol were cut and the advantage of that were passed on to the consumers, that would be a help. Unfortunately, the cost of petrol has never recovered since the Suez issue and petrol is still far too dear. The big companies are still buying up smaller companies all over the country. On the one hand, we have rich people growing richer and, on the other, poor people becoming poorer. Industry, manufacturing and distribution, is falling into fewer hands, so that we are getting more and bigger monopolies and combines and cartels all over the country while the working people's standards are getting lower and lower and they are accused of not being patriotic if they demand a restoration of their standards.
They will feel miserable about this Budget. The dangers we were facing this morning we are still facing now tonight. This Budget does nothing to encourage production, or to relieve the dangers, or to facilitate the negotiations going on at this time.
The Chancellor talks of the gross national product and of the total amount of money, but he and his colleagues fail to recognise how unevenly it is distributed and how misleading it is to speak of it as though it were spread evenly, whereas it is concentrated in the hands of a small number of people. The only people who can save this country, who can save its economy, are those who are usefully employed, and the way to save the economy of the country is to ensure that the workers continue to be employed in industry and are working in conditions which are satisfactory to them. Whatever may be the position of the economy today, a few months of strikes in those great industries would have effects from which it would take us many years to recover, and I hope that consideration will be given to these things now in this debate and in the subsequent debates on


the Finance Bill. Let the Government remember that it is one thing to sit on the benches in this House and talk about our economic position. It is quite another thing to be the wife of an unemployed man, or the mother of an unemployed son who sees little in store for him in the future. It is another thing to think in terms of some of the places in Scotland described by my hon. Friend the Member for Leith (Mr. Hoy), and in Wales as well. There are areas in Fife where, on the one hand, there is a developing coal area and, on the other, an industry in which there is unemployment.
From this point of view the Government have a duty not merely to look down on the problem, but to get down to its level and examine it properly, because if they do not do so there will not be much future for the country.

6.31 p.m.

Brigadier O. L. Prior-Palmer: I always listen with interest to the sincerity of the speeches made by the hon. Gentleman the Member for Kirkcaldy Burghs (Mr. Hubbard). May I recall to his mind the words of the Chancellor, not long ago, that he would do everything in his power to ensure that the level of unemployment in such areas is reduced? I am sure that the hon. Gentleman will agree with me that we must keep the total level of unemployment as low as possible and, at the same time, lower the level of unemployment in those areas and patches to that of the overall level in the country. Knowing my right hon. Friend as I do, and as he was in industry, I am certain that he will do everything in his power to bring that about.
I would like to follow one remark of the hon. Gentleman on the question of dividends. We have heard this one many times from the benches opposite. I implore hon. Gentlemen to realise, and to tell it to those people with whom they are in contact—because this is a misconception which is very prevalent in the country—that when there is published in the Press a dividend of, say, 35 per cent., it is not the case that the shareholders are being paid that amount, as is sometimes imagined. The 35 per cent. is on the original capital, and when the current price of the share is taken into consideration it will be found that the shareholder

is receiving a dividend of, say, 7 per cent. or 8 per cent. Of course, there are cases of bonuses being paid, and the hon. Gentleman quoted one. I will say something about that in a minute.
I do not think anyone would suggest for a moment that this is a startling Budget. It is a tidying-up Budget. The Chancellor of the Exchequer has tidied up his "in tray". Certain anomalies are being abolished or modified but there is nothing very striking. I do not think that anyone in the country expected anything very striking. The Government have been pursuing a disinflationary policy and that policy is being continued. Therefore, there is little that can be done in the way of tax relief at this juncture, or until we have killed inflation and the cost of living begins to come down.
Now I will criticise my right hon. Friend. I am sorry that, once again, we have a Chancellor who has found it impossible to do anything for a section of our community which is harder hit by inflation than any other. I am referring to those who have retired on fixed incomes. I am thinking of people who have worked hard all their working lives, who have saved money for their old age and who have invested it in equities or in house property. I know that the word "landlord" is anathema to some hon. Gentlemen opposite, but these people have invested in, perhaps, a couple of houses because it was the fashion to do so at one time.
As we all know, these people are having a hard time. There are large numbers of them in my constituency. They have served their country well, they have retired in a very modest way and they are finding living extremely hard. I know of ladies who are trying to live on £150 a year. I wonder how many people would like to try to live in retirement on £150 a year in these times. It is not easy. I admit that it is difficult to know what to do for them. In successive Budgets the present Government have reduced taxation. In successive Budgets they have raised the basic level for the payment of Income Tax. At one moment 18 million people were absolved from paying it altogether. This helped them a little, and the older people are being helped once again in this Budget.
I still say, however, that there are things which could have been done to


alleviate the lot of a large section of the people who are suffering from the effects of inflation. All the professional classes are suffering—doctors, dentists and lawyers. We must all agree that to a certain extent both the employers and the employees have contracted out of inflation. The employers have raised their prices and wage claims for the employees have come one after the other. It is true that some people are still earning too low wages. I quote the railwaymen as one group. By and large, however, the national average is not too bad —I think it is £12 a week—and in the steel works, in Sheffield, there are men who are taking home £18 and £24 a week. Good luck to them. They are making the finest steel in the world, at the lowest price. They have been contracting out of inflation, and those who are suffering intensely from it are those who comprise the professional classes and the older, retired people on small fixed incomes.
It might be said that we are taking measures to curb inflation and so to alleviate their lot, but I maintain that, in the meantime, something should have been done for them.

Mr. Hubbard: When the hon. and gallant Gentleman refers to the national level of wages, is he talking about the daily rate of wages or including overtime? Repeatedly I see figures in the newspapers of the average wage in specific industries which include the overtime being worked.

Brigadier Prior-Palmer: I think I am right in saying that the national average as published in statistics does not include overtime——

Mr. Hubbard: No, it includes overtime.

Brigadier Prior-Palmer: The people I am talking about cannot earn any more by working overtime. A doctor sometimes works all day and all night, but he gets no more for it. He has a certain number of panel patients and he can do nothing about inflation. Those are the people who are really suffering from the inflationary spiral, which has been with us for so long.
I hope that I shall not make hon. Gentlemen opposite angry by what I say now. I know that the party opposite is on record as having at one juncture seen

the light. I suggest that those people who save the State money by educating their own children and so freeing places in the State schools, who are often retired officers, parsons, and so on, living on small incomes and depriving themselves to educate their children, should get a little tax relief. That would do no harm. It would help to empty some of the State schools where we have classes of 45, 50 or 60, which everybody realises is wrong and ought to be put right. That is one way of helping the people about whom I am talking.
The other day the Daily Telegraph was kind enough to publish an article of mine about the taxation of married women. I will not quote the whole article. I moved an Amendment on this subject to the Finance Bill last year—I got a very encouraging answer—and I propose to do so again this year. I hope that the Chancellor will look into the matter before the Finance Bill comes before us. To paraphrase my article, it seems intolerable to me that we should have able, brilliant women, perhaps with the highest university degrees, some of them technologists and technicians who, when they marry, are charged Surtax—not Income Tax, but Surtax—on the very first penny they earn. I have known cases where the husband has said, "No, dear, you are not going out to work." We are losing a great deal of ability because of this. I was supported by two hon. Ladies opposite last year, and I hope that the same will happen this time. I mention this in passing to give warning that I intend to raise the subject on the Finance Bill.
I omitted one matter from my article—after all, articles are limited—and I got letters from very cross ladies because I had not mentioned the perfectly true fact that a married woman is also taxed at the full rate of Income Tax however small her private income may be. She does not get the gradation in tax relief that a single woman or a single man gets. Because she is married she has to pay at the rate of 8s. 6d. in the £ on all her very small income. That is wrong. I hope that I shall be able to raise the matter on the Finance Bill.
There is something else which I wondered whether the Chancellor could not have done. There are people with large incomes who are living in council houses. Council houses were intended not for


people with £1,000 and £2,000 a year, but for poorer people. Many council houses are cluttered up with people who could well afford to pay reasonable rents for other houses of a similar type. It is intolerable that a person should run a very expensive motor car—I could not begin to afford to run one—because he is saving money through living in a council house. Some local authorities have done something about this, but there are others which have done nothing. Why should not such people be taxed the amount of the subsidy? That would make them think again. This should apply to people over a certain income, I suggest. It would soon stop that sort of thing, and it would be extremely popular in the country, and many council houses would become available for the people for whom they were intended.
Finally, I want to make a plea in respect of the Rent Act. We all know that the full impact of this has not yet——

Mr. David Jones: How would the hon. and gallant Gentleman deal with a man who was paying for the education of his children in a private school and was also living in a council house?

Brigadier Prior-Palmer: I should deal with him very severely. If there were such a thing as a tax relief for a person who was educating his own children at a private school, probably the way to do it would be to say that the individual should not get it if he was living in a council house. Again, this would apply over a certain income level. If a £5 a week railwayman decided to send his child to a private school, good luck to him. He should get the relief.

Mr. Hubbard: With regard to what the hon. and gallant Gentleman has said about advantage being taken of subsidies by people who can afford to pay bigger rents, would he apply the same principle to some of the other people who get subsidies, such as landlord farmers, who receive subsidies to the extent that they pay the total wage bill?

Brigadier Prior-Palmer: Farming subsidies constitute a very wide subject. I should like to argue the case for or against

them with the hon. Gentleman at any other time, but I am not going into that subject now.
With regard to the Rent Act, I hoped most sincerely that the Chancellor would produce a scheme of low interest loans for people who wished to purchase their own houses. It is all very fine saying that local authorities can do this, but they cannot raise that sort of money and let it out at a low interest charge. I hope that we shall hear something more about this when the Finance Bill comes before us.

6.45 p.m.

Mr. Marcus Lipton: My main complaint against the Budget is that it does not face the basic long-term dilemma which must inevitably confront any Government in this country at present. The country is still trying to do far more than its resources will allow. That is the reason why we have had the recent outbreak of resignations, by the right hon. Member for Monmouth (Mr. P. Thorneycroft) and other right hon. and learned Gentlemen opposite. They had come to the conclusion honestly and sincerely—a conclusion with which I cannot quarrel—that we are still trying to do far more than we can afford.
There is nothing in the Budget to indicate that the Government are facing up to this fundamental problem. No one who has studied the economic facts of life will deny that we cannot carry the burden of defence in the nuclear age without jeopardising the policy of full employment. We can have either one or the other, but—I think that this is the reason for the recent resignations—we cannot have both. I wish there had been some indication in the Budget speech that the Government are applying their mind to this problem. But what do we find? We find a lot of fiddling, maybe virtuous, alterations of a minor character, but the Government do not face the real problem.
I was interested to note in the figures submitted to us that we are asked to make provision for £733 million for servicing the National Debt. I compared the other figures in the Budget statement. The £733 million which the taxpayers will have to find to pay interest on the National Debt during the next twelve months would pay for the whole of our


National Health Service, plus war pensions, plus National Assistance, plus noncontributory old-age pensions. That will give some idea of the magnitude of the sacrifice that we are having to undergo to pay for past wars and—heaven forbid—to pay for future wars. When people talk about wasteful Government expenditure on the social services, I should like them to bear in mind the simple comparison that I have made, which shows that the interest on the National Debt exceeds the cost of the social services to which I have referred.
The only way in which the country will find economic salvation will be by increased production. Until we make full use of all the capital and labour available, we shall never be able to deal with the retired people living in the constituency of the hon. and gallant Member for Worthing (Brigadier Prior-Palmer), or anywhere else.
There are certain responsibilities which the community has to bear in respect of old people, retired people, poor people, sick people, but we cannot possibly bear that burden unless we make the fullest possible use of our production. An examination of the Budget and of the record of the Government during the past few years will show that British industry is producing no more today than in the autumn of 1955. Labour and capital are standing idle or are being wasted, and the increase in production in this country compares most unfavourably with that in Germany, France and many other Continental countries.
This is no accident. It is the result of deliberate policy on the part of the Government, who believe that the only way in which to deal with what they consider to to be an inflationary situation is to restrict credit and to apply other restrictive policies. At the same time as they apply those restrictive policies, they leave open wide gaps in our economic structure, gaps which make it all too easy for foreign speculators to take advantage of the absence of currency restrictions.
We do not have to go too far back. Does not the Committee remember the hundreds of millions of pounds lost through what is now known briefly as the Kuwait gap? That gap has now been closed. However, the Government are always running in a race to close gaps here and there, but there is still one which

remains wide open. That is the support of the exchange rate for transferable sterling, as a result of which bankers in Zurich and elsewhere are drawing from our gold and dollar reserves.
Figures have been published to show that up to December last year, through those two gaps in our defences, the Kuwait gap, which has now been closed, and the transferable sterling gap, which is still open, we have lost up to £500 million. That is because the Government have a doctrinaire opposition to any kind of control, even if that means punishing the community to this very substantial extent.
There was nothing in today's Budget about the closing of this gap and we may find ourselves faced with an autumn crisis as the result of which there will have to be an autumn Budget. We are living from one crisis to another with our gold and dollar reserves, which are not adequate to enable us to be the bankers of the sterling area, simply because the Government will not take the necessary steps to close this gap and to exercise some proper control over our gold and dollar reserves.
That is the short point which I wanted to make. There may be other hon. Members wishing to speak in the limited time available, and I do not want to prevent anyone else from speaking. I hope that in the course of our debates over the next few days the Government will be able to give us some evidence of their desire to deal with what I described as this fundamental, basic problem of how we are to provide defence in a nuclear age with the preservation of the Welfare State and full employment. The two cannot be combined. The Government will have to make their choice. If they do not make their choice, the electors will make the choice for them at the next General Election.

6.55 p.m.

Mr. G. R. Howard: It is too early to say very much about the Budget, and I shall, therefore, detain the Committee for only a few moments. I welcome the general tone of the Budget, and particularly what my right hon. Friend said about the unfortunate areas where local unemployment is higher than the national average. Unfortunately, in my part of the West Country, Cornwall, we have such areas because, as hon. Members know, this is a part of the country


with a seasonal unemployment problem, with holiday makers coming in the summer, but with people unable to find work in the winter.
I was very glad to hear what my right hon. Friend had to say about dry docks. There is a small firm in my constituency, Holman's, of Penzance, which is doing well in this work and which wishes to expand, and I hope that the proposals of my right hon. Friend will help it. I wish that small farmers could have this form of credit extended to them.
I welcome what my right hon. Friend had to say about holding public expenditure. I am all for necessary expenditure, especially on defence, but we want to watch such expenditure very carefully to ensure that it is not more than it should be. There must be many ways in which we could cut it down. Some of us who are familiar with Service Departments know that the process of empire building often takes place. In the Navy, for example, the civilian element seems to grow larger and larger as the Navy gets smaller. We have made representations about that and I know that the Admiralty is watching the situation, but it must show that it is prepared to continue to make necessary cuts, however unpopular they may be.
I was also pleased to hear what my right hon. Friend had to say about the Commonwealth Economic Conference and about co-operation in the Commonwealth. I hope that that meant that during the economic conference in the autumn what is known as the Braithwaite Plan, or Commonwealth Bank Plan, will be considered.
I welcome the proposals to assist small cinemas because, particularly in my part of the country, small cinemas have suffered badly. I was also very glad to hear what my right hon. Friend said about reductions in tax on things such as cameras and greetings cards.
In conclusion, I congratulate the

Chancellor on not giving way to much popular clamour, but for giving us what is perhaps a somewhat tough Budget which should show the country that the Government are prepared to give the leadership that the present situation appears to need.

6.58 p.m.

Mr. Harold Davies: It is impossible, in the limited time at our disposal, to deal with all the aspects of the Budget, but I give notice that I shall move an Amendment to the Finance Bill dealing with Table IX of the Financial Statement, which slipped through the Committee apparently unnoticed. It is difficult to understand what the Chancellor intends. He wants increased production in the mines, yet miners' protective helmets and protective boots, which were formerly free of tax, are now to be taxed at 5 per cent. Who could have advised the Chancellor to do that?
Protective boots for miners, quarrymen or moulders; clogs and other wooden-soled footwear
are to be taxed at 5 per cent. whereas they were previously free of tax. Even babies' headwear will be taxed at 30 per cent. if it contains wool. I hope that my hon. Friends will vigorously oppose this tax on the miners.
I agree with my hon. Friend the Member for Brixton (Mr. Lipton) that constructive suggestions for dealing with the present economic situation have not been made. The Chancellor referred to the European Free Trade Area, but we have just lost £280 million worth of Far Eastern trade.

It being Seven o'clock, The CHAIRMAN left the Chair, further Proceeding standing postponed until after the consideration of Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 (Time for taking Private Business).

Mr. SPEAKER: Mr. SPEAKER resumed the Chair.

WALLASEY CORPORATION BILL

(By Order)

Read a Second time and committed.

7.1 p.m.

Mr. Ernest Davies: I beg to move,
That it be an Instruction to the Committee on the Bill to leave out Clauses 48 and 49.
I move this Instruction for two main reasons, which I think will be understood by the House. First, Clause 48 of the Bill proposes that the Wallasey Corporation shall have power to charge for parking on certain of the promenades used by the public for their normal purposes, and Clause 49 proposes that these promenades shall be closed upon certain occasions.
I oppose the Clauses and ask the House to agree to the Instruction because, in my view, they would create a precedent. By allowing the Corporation to charge for parking on these promenades the Bill would be incorporating a power which local authorities do not normally have, and a precedent would thereby be created which might well be followed by other municipalities. If we are going to create a precedent, I submit that it must be shown that it is clearly justified and necessary.
It is especially undesirable that this new precedent should be created because, where similar power has previously been sought, it has heretofore been denied. In fact, the Ministry of Housing and Local Government, in its model byelaws, has made it quite clear that in the past it has been opposed to corporations obtaining this power. This was because Section 68 of the Public Health Act, 1925, provided that charges should not be made for such purposes. In the byelaws circulated to local authorities it is stated that
it is important for the Local Authority to remember that Parliament expressly framed the section"—
that is, Section 68—
so as to preclude their charging for the use of a parking place in a street.
Later, in explanation, the byelaw states:
There was general reluctance to allow a charge for the use of space in a street, but at a late stage in the Bill the House of Lords inserted an Amendment providing for charges for the services of an attendant. The House of Commons, however, resolved that it was 'inexpedient to authorise the making of a charge

direct or indirect for the use of the highway'—thus indicating that a charge for 'services' was. in their view, indistinguishable in this context from the charge for use of the highway to which objection had previously been taken.
That is the first reason why this power has not been given to local authorities heretofore. A precedent would be created, and it is incumbent upon the Corporation to prove that the power should be given it.
The second reason is that a principle is being put forward which Parliament has conferred only very reluctantly—and it is a principle which has been conferred not upon individual municipalities, but upon the Minister himself. Under the 1956 Road Traffic Act, power is given to the Minister, by regulation, to make schemes under which charges may be made for parking on the highway, and it was only with reluctance that Parliament agreed to that.
The reason why it did so is that it was considered that, where traffic needs demanded it, it would be desirable to have parking meters or other devices for collecting revenue—which revenue was to be devoted to purposes incorporated in the Act. After paying expenses of carrying through the scheme, the money had to be used for providing off-street parking accommodation. The conditions and safeguards were laid down in the Sections of the 1956 Act which refer to the making of parking schemes.
These safeguards and conditions are not incorporated in the two Clauses to which I have referred and which I wish to see deleted from the Bill. Power is sought to make charges for parking on the highway. No provision is made as to what those charges will be, or as to the conditions under which the power shall be exercised. In other words, carte blanche is given by the Corporation. If, in passing the 1956 Act, the House and another place incorporated certain conditions and provisions therein, those provisions should at least be incorporated in these Clauses if Parliament is to give this power to the Corporation.
At the same time, it would seem to be incumbent upon the Corporation to show that its needs meet those which were considered to be required before a parking scheme of this nature could be instituted, and charges made for parking upon the highway. The 1956 Act made it quite clear that the purpose of charging


motorists for parking on streets was not to obtain revenue but to improve traffic flow and to meet the needs of motorists. In the Bill, however, it appears that the only reason why the Corporation has made the proposal is that it wishes to use the promenades for the purpose of collecting revenue from motorists. Parliament has not accepted that principle so far, and I consider that in this case it would not be desirable to confer this power.
There is a further justification for moving the Instruction. The 1956 Act made it clear that parking schemes could be authorised by the Minister in any part of England and Wales. Although the provision of parking places was to be only in the Metropolitan Police area and the City of London, it was made clear that the Minister, upon the application of a local authority, could extend the system and provide parking places in any area in England or Wales, in addition to the Metropolitan Police area and the City of London.
Under Section 19 (7) of the Act:
The Minister may by order provide that subsection (1) of this section"—
which provides that he may make regulations regarding the provision of parking places—
shall apply to any such area in England or Wales, in addition to the Metropolitan Police District and the City of London, as may be specified by the order.
It is quite clear, therefore, that the Minister of Transport and Civil Aviation has the power to make or to extend regulations for the provision of parking areas for which a charge can be made anywhere in England or Wales. I do not understand why the Wallasey Corporation is seeking powers to institute parking schemes on the highway and make charges when it has been decided by Parliament that it is within the power of the Minister to do that. I do not understand why the Corporation does not make use of the 1956 Act and ask the Minister to make regulations so that the safeguards and conditions which Parliament considers necessary can be provided before any such parking schemes are introduced. Those are the main reasons why I suggest that this Motion should be accepted.
I am opposed to the principle of charging for parking on the highway, unless it

is clear that any revenue derived from the charges shall go to the provision of off-street parking facilities, and that the purposes of the 1956 Act in this respect shall be carried out. I understand that a petition by members of motoring organisations will come before the Committee which will deal with this Bill. If the Wallasey Corporation were able to give an undertaking that revenue derived from parking charges would be used to provide off-street parking facilities, the Committee would have an opportunity to consider that and to amend the Bill so as to ensure that the money was used for that purpose. If such an undertaking could be given in this debate, perhaps I might obtain the leave of the House to withdraw this Motion.
Such a procedure would not, however, meet my reason for moving this Motion. I am opposed to the two Clauses on principle, because they establish a precedent and because the power to create these parking schemes already exists. During our debates on the 1956 Act a number of Amendments were moved because it was considered desirable that there should be ample safeguards provided, and the final provisions met the wishes expressed by hon. Members on both sides of the House. It would be helpful if the Joint Parliamentary Secretary could say that, in view of the existing powers, his right hon. Friend does not consider it necessary for these powers to be given to the Wallasey Corporation, but that the Corporation should proceed under the provisions of the 1956 Act.
I do not wish to deal with Clause 49, where the question of principle which is raised is not so serious. It is undesirable that highways should be closed. Powers exist for the closure of highways in certain circumstances and I consider them adequate, as are the existing powers for the provision of parking places on public highways for which a charge is made. I move this Motion to obtain the view of the Ministry and to ask those who speak for the Wallasey Corporation whether they would be willing to meet the desires of those of us who oppose these two Clauses.

7.15 p.m.

Mr. R. Gresham Cooke: I beg to second the Motion.
I consider that two important principles are involved. First, Clause 48 relates


to charging for parking on certain promenades. Clause 49 is almost as important and there power is sought to close the promenades on special occasions for up to twelve days in the year. As has been said, the setting up of parking spaces was governed by the Public Health Act, 1925, which laid down that if there were parking spaces on the road, they should be free. Parliament always upheld that principle and never authorised charges for parking on the road until 1956, when provision was made for such charges by Section 19 of the Road Traffic Act, 1956.
During the Committee stage debates on that Measure we had hours of discussion about the granting of power for charges for parking on the highway, and as a result it was agreed that parking schemes, with parking meters, should be set up on the highway. There were three conditions. First, a scheme had to be part of a proper scheme for parking, including parking meters; secondly, it had to be under the control of the Ministry; and, thirdly, surplus funds should be applied to the provision of off-street parking. To show some of the conditions, which have to be fulfilled, and the sort of considerations which the Minister had to take into account, I will read Section 19 (2) of the 1956 Act:
In determining what parking places are to be designated under this section the Minister shall consider both the interests of traffic and those of the owners and occupiers of adjoining property, and in particular the matters to which he shall have regard shall include—(a) the need for maintaining the free movement of traffic, and (b) the need for maintaining reasonable access to premises, and (c) the extent to which parking accommodation (whether open or covered) otherwise than on highways is available in the neighbourhood or the provision thereof is likely to be encouraged there by the designation of parking places under this section.
The Minister has to consider whether he is satisfied that the free movement of traffic is maintained and that there is reasonable access to premises, and so on. Under Clause 49 of this Bill, where the Corporation seeks powers to close promenades altogether for a period of up to twelve days a year, there would not be any free movement of traffic at all. That indicates that this is an important matter.
This scheme of the Corporation is unprecedented. I regard it as a money-raising stunt. I do not think it has a

great deal of support locally. The other day I was favoured with a letter from an inhabitant of Wallasey who writes:
I am very pleased to read that with"—
the hon. Member for Enfield, East (Mr. Ernest Davies)—
you are opposing the Wallasey Corporation Bill.
That is regarding the two Clauses.
I hope you will continue to stand out for the abolition of this Clause as it is a sheer imposition on motorists in general that they should be expected to pay more for the use of a public highway.
No doubt the writer had in mind that motorists already pay for the highway through taxation and rates, and so on.
Should this Clause go through, one can well imagine the rush there would be for all authorities to find excuses to make charges to motorists all over the country.
That is a quite reasonable fear. The letter goes on:
For your information, there are two miles of promenade prohibited to motorists, so the free use of King's Parade is not causing hardship to people objecting to motors parking on the prom.
I can assure you your efforts have a lot of support in Wallasey and outside districts, where people come in cars to spend a few hours at the seaside with their families. Your efforts are without doubt of national importance.
That is what somebody in Wallasey says.
Even if the Corporation were willing to set aside the profits from charges in this parking scheme for off-street parking, the scheme should still be controlled by the Minister under the Road Traffic Act. The Minister has to take account of the requirements of traffic, which the Corporation does not seem to have done.

Mr. Percy Collick: The hon. Member said that he regarded this scheme as a stunt. Why does he regard a serious proposition put forward by a Conservative administration as a stunt?

Mr. Gresham Cooke: Because it does not seem to take into account the requirements of traffic by making more parking facilities. The only reason for Clause 48 seems to be to enable the Corporation to make money.

Mr. Collick: And therefore it is a stunt?

Mr. Gresham Cooke: For a local authority to enter into a commercial enterprise of that kind——

Mr. F. H. Hayman: Does the hon. Member say that it is wrong for any local authority to conduct any public enterprise?

Mr. Gresham Cooke: My view is that the fewer enterprises of a commercial nature conducted by local authorities the better. I do not think that the matter was better put than by the Earl of Selkirk, who stated, in the debate in another place on the Road Traffic Bill, 1955, when the question of parking places on the highway was being considered:
I feel that it is not possible to overestimate the degree to which the closing of the Queen's highway constitutes an invasion of personal liberty. It is really making a public road into a private road, and no one should in any way misconceive the significance of doing so. It would become a statutory offence to walk on the road or to drive a motor car on it."—[OFFICIAL REPORT. House of Lords, 22nd February, 1955; Vol. 191, c. 352.]
I know that there are representatives of the promotors present. Now that they have heard what the hon. Member for Enfield, East and myself have said, I hope that they will show their good sense by giving an undertaking that the offending Clauses will be withdrawn.

7.22 p.m.

Mr. John Tilney: In the absence of my right hon. Friend the Member for Wallasey (Mr. Marples), who, as a Minister, is prohibited, by custom, from taking part in this discussion, it falls to me to put the point of view of the Wallasey Corporation. A statement is available outside for hon. Members who would like to read it.
Although the Corporation has already met the objections of a great many people there are still objections to Clauses 48 and 49. The Corporation does not wish to discourage motorists from coming to Wallasey and parking their cars on King's Parade. I do not know whether the hon. Member for Enfield, East (Mr. Ernest Davies), or my hon. Friend the Member for Twickenham (Mr. Gresham Cooke), have visited Wallasey or have seen that great parade, which was reclaimed in large part from the sea and which cost, before the war, £1 million, at pre-war money values. Motorists such as myself were able to go there last year and park our cars. The Corporation has to pick up the litter left by motorists who eat meals there.
The problem is a very different one from that which was put to the House by the hon. Member for Enfield, East, and which the House debated in 1956 on the Bill to which my hon. Friend the Member for Twickenham has referred. It is easy, even at the height of the summer, to motor along the parade even with cars parked along it. The Corporation has provided a large number of parking places near-by.
It may be that the Joint Parliamentary Secretary may never be able to use his power under the 1956 Act to enable a charge to be made for parking, yet it seems fair, considering the large expenditure of money needed for the upkeep of that parade, that a charge should be made. The Corporation has no intention of charging for parking all along the parade, but only at some of the more popular spots. The Joint Parliamentary Secretary may object to the problem being dealt with on the somewhat piecemeal basis of a Private Bill, but I am empowered by the Corporation to make an offer. It is that an account will be kept of income and expenditure in respect of parking places on the promenade mentioned in Clause 44, and that any surplus of income over expenditure in any year will be applied in the next year, first, to making good any deficit on the account in the previous four years and, secondly, towards the provision and maintenance by the Corporation of off-street parking places. I hope that that offer will go a long way towards meeting the objections of the hon. Member and of my hon. Friend.
Clause 49 is quite different in principle. The Corporation wishes to close from time to time the free parade mentioned in the Bill and to provide extra amenities that Wallasey, and particularly New Brighton, which is a part of Wallasey, offers to visiting tourists, for such things as car races, motor-cycle races, pedal-cycle races, soapbox "Derbies", carnivals and sports of different kinds. Such powers have already been given by this House to Brighton and Blackpool; the Corporation of Wallasey is asking for powers somewhat less than those.
This is a long Bill. Arguments on its various Clauses will be conducted before the Committee. I hope that the same consideration will apply to the two Clauses that we are now discussing and


that the hon. Gentleman and my hon. Friend will be prepared to withdraw their Motion for an Instruction.

7.30 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): It may be for the assistance of the House if I offer a comment on the point of view of the Ministry of Transport on these two Clauses and the Instruction which the hon. Member for Enfield, East (Mr. Ernest Davies) and my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) have moved and seconded, and which has now been replied to.
I am afraid I must advise the House that the Instruction, at any rate on Clause 48, has substance in principle, as I shall briefly show. It is not for me, of course, to go into detail, and I fully accept what my hon. Friend the Member for Wavertree (Mr. Tilney) has told us of the excellence of the motives of Wallasey Corporation in all it has done, but the difficulty is as follows. The law as it stood until 1956 was correctly recited by the hon. Member for Enfield, East and my hon. Friend the Member for Twickenham. The 1925 Act specifically prohibited charges for parking on the highways. The 1956 Act, passed after very lengthy discussion, as the hon. Member for Enfield, East rightly said, authorised the Minister of Transport to approve parking schemes in which charges can be made for parking on the highway, subject to certain conditions.
At present the authority of the Minister runs only in the London Traffic Area. Those conditions were very carefully drawn by the House after lengthy argument. Parliament decided that those powers could not be extended outside the Greater London area except subject to an affirmative Resolution of both Houses of Parliament, which, naturally, would be preceded by consideration of how the scheme had worked in London and whether it was suitable then to be extended to the Provinces. Parliament has considered this matter very carefully indeed and decided that it would be right to have parking schemes where charges are made for parking vehicles in the highway in certain circumstances, but safeguards for the interests of motorists, for road users generally and private interests of all kinds were very carefully designed after lengthy discussion.
There has to be public inquiry, and so on, if there are objections and, at the end of that procedure, the Minister has to approve the order proposed by the local authority. That, of course, is subject to negative procedure in this House. So the most detailed, careful safeguards, ensure that these schemes are approved only if they are really justified in the interests of traffic movement and are consonant with the private interests affected. I think it quite clear in those circumstances that it could not be right in principle for any local authority to come forward with a scheme outside London which in effect purported to give it authority to start parking schemes, so to speak, before the flag has fallen.
The Westminster scheme is getting under way No doubt an Order will soon be coming before this House, if it is thought fit to pray against it, and it may be that that scheme will be introduced in the summer. We shall then have a chance to see how it works. If such schemes work as I hope they will, in due course Parliament might feel that they should be extended to the rest of the country, but I am certain that in principle it would be wrong for the House to approve of a local authority Bill taking power in advance and without all the safeguards which have been so carefully written into the 1956 Act.
My advice is that Clause 48 is really not appropriate. It derogates from national legislation which this House has already approved and if, as the hon. Member for Enfield, East indicated, it is his intention to withdraw the Instruction, I hope that what I have said will be taken note of in Committee.

Mr. Collick: Before the hon. Gentleman leaves that point, may I ask if one would be right in understanding that the Minister has no intention whatever of making or approving of a parking scheme in the Provinces until experience of the London schemes has been obtained?

Mr. Nugent: That is so. My right hon. Friend cannot approve a scheme in the Provinces until Parliament, by an Order subject to the affirmative Resolution procedure, has approved the extension of the parking scheme project to the Provinces. Quite clearly, the House would not wish to consider such an extension until we have had experience in London. In effect


the answer to the hon. Member's question is "Yes".
Turning to Clause 49, I feel there is no difficulty in principle from our point of view. It seems to me entirely a matter for the Committee to decide on its merits. Clause 49 provides for the closing or limiting of traffic on promenades during fetes and other functions. There are precedents for that, as my hon. Friend the Member for Wavertree said, and it is entirely a matter for the Committee to decide whether local circumstances warrant that. I do not think there is any difficulty there, but my advice on Clause 48 must be that in principle the Clause is not really acceptable.

7.38 p.m.

Mr. Ernest Davies: I speak again by leave of the House. Before I ask leave to withdraw the Instruction, I wish to say how much I appreciate the offer which has been made by the Corporation to meet those who oppose these two Clauses. I appreciate what the hon. Member for Wavertree (Mr. Tilney) has said. I feel sure that, in the circumstances, it will be far better for the Committee to make the decision on these two Clauses than for the House to take a decision tonight. I am sure that the Committee will take into account not only the petition which will be before it, but also the remarks made by the Joint Parliamentary Secretary tonight, which have been most helpful and which bear out exactly the point of view taken by the hon. Member for Twickenham (Mr. Gresham Cooke) and myself.

7.39 p.m.

Mr. Nigel Nicolson: Before the hon. Member for Enfield, East (Mr. Ernest Davies) asks leave to withdraw the Instruction, would it be possible, Mr. Speaker, for me to express a point of view which has not yet been put?

Mr. Speaker: If the hon. Member for Enfield, East (Mr. Ernest Davies) asks leave to withdraw the Instruction, I must put the matter to the House.

Mr. Nicolson: I thought that the hon. Member had not yet asked leave to withdraw the Motion, but was about to do so.

Mr. Davies: In the circumstances, if it is in order, I will give way to the hon.

Member for East Bournemouth and Christchurch (Mr. N. Nicolson) before I actually ask leave to withdraw the Motion, Sir.

Mr. Nicolson: I intended to make a short speech, rather more than an intervention in the speech of the hon. Member for Enfield, East. If I speak for five minutes, I hope that the hon. Member will not think that an impertinence. I have no brief for the Wallasey Corporation and the only reason I intervene is to put the point of view of the resort towns on these two suggested Clauses. They affect the 150 towns scattered around our coasts, which depend largely or entirely upon revenue from holiday visitors.
I was rather disappointed when I heard my hon. Friend the Joint Parliamentary Secretary advise the House to endorse this Instruction, because I felt that the freeing of main arteries in the Metropolis and large provincial cities from congestion by the parking of cars is quite different from the circumstances which arise on promenades at seaside resorts. In the latter case, the promenade is intended both as a highway and as a parking place, and I do not think that there is any other category of street which exactly fulfils both these conditions.
The corporations of these resorts are providing at their own expense—and even at very great expense—a highway along the seafront which adds to the amenities of the town and to the pleasure which it affords to the visitors. These places are to be compared with the drive-in cinema so popular in the United States; you sit in your car and from the driving seat enjoy the passing show. Since it is, therefore, an amenity, and gives added pleasure, I do not see why it should be objectionable for a corporation to make a small charge for making use of it.
Seaside resorts are notoriously hard-up. They may give the appearance of prosperity, but frequently they find it difficult to extract any money at all from the casual day visitor. It seems to me reasonable that when a man brings his family to towns like Wallasey, Bournemouth, or Brighton for the day, he should make his contribution to what otherwise the ratepayers of these towns will be providing for him free of charge.
Further, many of these promenades are built on the top of highly expensive coast protection works. This is the case in my own borough. The public expect them, but as taxpayers and ratepayers they contribute very little towards these works, and I think it is perfectly fitting that when a corporation uses the top of such a sea wall for the parking of cars the visitors should be asked to pay 1s. for an hour or two for the pleasure which they derive from it.
The hon. Member for Enfield, East, who moved the Motion, and his seconder on this side of the House, said very little indeed about Clause 49, but there, too, it strikes me as only reasonable that a corporation like Wallasey should ask the House for permission to incorporate a Clause allowing it to close a certain section of the promenade for the reasons which my hon. Friend the Member for Wavertree (Mr. Tilney) outlined. Indeed, it is sometimes essential to do so.
I was surprised to see that the Wallasey Corporation intends only to close a section of the promenade for no more than 12 days in any year, because in my constituency there is a promenade which runs under the cliff which is open to traffic for the entire winter but is closed for the entire summer. It constitutes a danger to the public, when the beaches are crowded with people passing backwards and forwards across this broad promenade from the beach to the beach huts on the other side, if cars are allowed to be driven freely along it.
For that reason—the reason of public safety—as well as for the reason specifically given—the reason of public enjoyment—I think that Clause 49 is as much justified as Clause 48.

Mr. Ernest Davies: I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

WAYS AND MEANS

Again considered in Committee.

[Sir GORDON TOUCHE in the Chair]

BUDGET PROPOSALS

Question again proposed,

AMENDMENT OF LAW

That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance.

7.44 p.m.

Mr. Harold Davies: After that interesting interruption, I should like to draw the attention of the Committee again to the point which I was raising earlier.
The point that I made before the interruption took place was that I have discovered that, according to Table IX of the Financial Statement given to us by the Chancellor of the Exchequer, there are changes in the system of Purchase Tax. I want an explanation eventually of the following anomaly. Whereas before the Budget statement today
Protective boots for miners, quarrymen or moulders; clogs and other wooden-soled footwear
were entirely exempt from Purchase Tax, after today, or eventually by means of an order, British miners will have to pay 5 per cent. Purchase Tax on their boots. Anybody who knows anything about mining knows that boots are essential factors in the cutting of coal in the rough geological conditions which miners have to face.
We have the further item in Table IX showing that, not only is the Chancellor putting a 5 per cent. tax on miners' boots, but also a 5 per cent. tax on
Protective helmets for miners or quarrymen.
Here we have it in black and white. Whereas under the present system they are completely exempt, after today or on the Budget becoming law, British colliers will have to pay a 5 per cent. tax for their protective helmets, This is ridiculous; this is foolish.
Again in Table IX we find that fur garments which are at present liable to a rate of 50 per cent. are in future to be reduced to a rate of 30 per cent. Can the Chancellor of the Exchequer, in the


name of common sense, justify to this Committee how he can drop the tax on fur garments from 50 per cent. to 30 per cent. while at the same time taxing a hitherto exempted essential tool in the production of coal? I shall certainly make it my duty to put down an Amendment to the proposal on consideration of the Finance Bill, and I hope that all my colleagues, especially those who come from mining areas or who represent mining areas, will let the Chancellor of the Exchequer see that he is not going to get this proposal in his Bill without a fight from our side.
The anomaly is further increased as a result of the increase, shown in Table X, in the initial allowances on plant and machinery to 25 per cent. and on industrial buildings to 12½ per cent. As a result of all this, the cost to the nation this year will be £16 million. I agree with the increase of the initial allowances, because that is an encouragement to investment, but I do not agree with the hint given by the Chancellor today that we should hold back our investment. If we hold back our investment, we cannot compete with Western Germany or with the high-powered methods of the U.S.S.R. or of the United States, but while the Chancellor is encouraging investment by companies and manufacturers by giving them a 25 per cent. initial allowance, he is increasing the cost of the colliers' boots by the imposition of a 5 per cent. Purchase Tax. Boots are essential. How in the name of common sense the Chancellor can justify this imposition of tax on protective helmets and boots for miners and quarrymen, while at the same time giving a 25 per cent. initial allowance to manufacturers and others who put down new plant and machinery, I fail to understand.
According to the Economic Survey, the amount of coal used in 1957 was less by 5 million tons than it was in 1956. There was an increase of 2 million tons in exports and stock changes of coke. The fact is that we used about 7 million tons less in Britain last year. I do not want to bore the Committee by quoting what every interested hon. Member makes it his duty to read and understand, namely, the Economic Survey. We have a growing problem in the mining industry and—I say it with all sincerity—we have a growing problem on the industrial front

today. Yet, when there are these problems, this silly little thing is slipped into the Budget. It would have been noticed by my colleagues, of course; it would have been noticed when we came to deal with matters in full in Committee, but it is my duty now to point out to the Chancellor of the Exchequer and to right hon. and hon. Gentlemen opposite that we on this side will divide the Committee rather than let this absurd provision in regard to Purchase Tax go through.
It would be remiss of me to make a long, unprepared speech on what is really a serious issue confronting us about the nation's balance sheet in relation to the nation's production. Every one of us, on both sides of the Committee, has a great respect for the right hon. Gentleman who spoke this afternoon as Chancellor of the Exchequer. We believe in his sincerity, and I believe—I speak for myself—that he is as anxious as I am to see a prosperous nation and to solve our economic problems. To do these things, however, we need a little of the spirit of adventure. What worries me is that the right hon. Gentleman has been listening—it is evidenced by this silly provision about miners' boots and helmets—too readily to people in swivel chairs who are miles away from the realities at the point of production of the nation's goods, fuel, machines and wealth. I ask him to break through that sort of thing and to show some spirit of adventure. The right hon. Gentleman has spoken about this Elizabethan age before, when dealing with agriculture. I ask him now to approach his Budget in an adventurous spirit. At least, to save the Committee having to divide, he should withdraw this ridiculous provision adding a 5 per cent. tax on protective clothing for the colliers of Britain.

7.54 p.m.

Mrs. Harriet Slater: I wish to reinforce the plea made by my hon. Friend the Member for Leek (Mr. Harold Davies). He has already pointed out that the mining industry is at a difficult stage. We want to introduce new machinery. We want as much coal as we can get. Also, we want the good will of the men working in the industry. I ask the Chancellor to look at the matter again not only from the point of view put by my hon. Friend but also from the point of view of the safety of miners. After all, protective boots and helmets


were introduced in the mines to reduce the accident rate, and anyone living in a mining area knows how much their introduction has meant in reducing serious injuries to those working in the pits. As my hon. Friend pointed out, in a Budget where not many radical changes are made, this is a very reactionary step to take and one which will not have the support, at any rate, of the men who work in the industry or of their wives, who have to suffer when the men are injured if they have not these items of protective clothing. There is also the factor that men are taken out of work if they suffer injury through accident.
As a housewife, I welcome the very generous reduction of Purchase Tax on electrical goods. I have always argued that the person who needs the electric cleaner, the electric washer and refrigerator is the woman who has a family to look after, the working-class woman particularly, who has to do all the jobs herself and, in many cases, go out to work as well. I do not look upon the refrigerator as a luxury; it is very much a necessity, particularly to women who go out to work. The housewife will welcome the reduction in tax on all such household goods and equipment.
As a representative of north Staffordshire, I must say that I am convinced that people working in the pottery industry, both manufacturers and workers, will very much regret that the Chancellor has not been able to reduce the tax on pottery. Everyone knows the arguments we put twelve months ago and two years ago. In our industry, there has been some short-time working, and. if there is unemployment in America, our industry may well feel the brunt of it as much as any other industry in this country. We should like to think that the Chancellor will look at the matter again sympathetically.
I regretted very much the Chancellor's announcement that local authority spending is to be cut by £27 million on what it was last year. This seems to add insult to injury. After all, during the last two years local authorities have been told to cut back expenditure of all kinds. The Local Government Bill, which will force local authorities to face further possible cuts in essential expenditure, is still being discussed in Standing Committee. This further cut of £27 million will mean that many essential schemes will be delayed for another twelve months or, perhaps.

much longer than that. I am thinking particularly of vital road improvement schemes and such things as sewage disposal schemes, particularly at the seaside. Seaside local authorities will be very reluctant to spend large amounts of money on sewage disposal schemes if, in other aspects of their work, they have to cut back. In the interests of health and safety, it is not wise policy to ask that major schemes of this kind should be further cut.
The Chancellor referred to what he called "patches of unemployment". Some areas have much more unemployment than others, but there is one industry where unemployment is growing as a result of Government policy, namely, the building industry. In almost every part of the country, building workers, both craftsmen and labourers, are now suffering a threat of insecurity such as they have not known since 1945. That aspect of unemployment, which is not peculiar to one area but to most, will be affected by a cutting back in local authority spending. I have house building specially in mind. Most local authorities, particularly in industrial areas, have seriously, drastically and, I think, dangerously cut down their house building programmes. This Budget means that the building workers and others concerned in the industry will again suffer a knock.
There is one other tax about which I thought the Chancellor might have done something—it is not the tax on wines; that is one which I would willingly have left alone—and that is the tax on petrol. Here was an opportunity to do something for industry as a whole, because the higher the petrol duty the higher the transport costs for industry. Almost every industry, especially those concerned with the export trade which have to get their goods to the ports, is affected by the petrol tax. If he is concerned to keep down the cost of living as much as possible, this is a tax about which the Chancellor should have done something. It affects transport costs, and the bus fares which workers have to pay. There is a real problem for many workers who, because of local authority extension and development, now live on the outskirts of cities and have to spend quite large amounts on bus fares.
We all welcome, as I am sure the cinema industry will welcome, the reduction in Entertainments Duty. This is a tax which has cried aloud for a reduction.


This is an example where pressure has been brought to bear very forcibly; and I hope that before the Finance Bill reaches its final stages those of us who represent mining areas will find that our pressure has resulted in the withdrawal of the tax on miners' boots.

8.4 p.m.

Sir John Barlow: I had not intended to speak in the debate, and for that reason I shall not delay the Committee long. However, after listening to a number of speeches made by hon. Members opposite, I must say that when taking into account the natural opposition which one expects this Budget will be received remarkably well by the Opposition. If one analyses the arguments that we have heard, there is very little real ground for opposition. It is only too easy to say that we might have had a little more off Purchase Tax, or this, that and the other, and it is very easy to say that we might have had a little off the petrol duty, which we should all have liked. But we must realise that the cake is of very limited size and the amount available for distribution is very limited, also.
The Chancellor has done extraordinarily well in the Budget that he has put before us. The hon. Member for Leek (Mr. Harold Davies) complained that there was no spirit of adventure in the Budget. I think that a spirit of adventure at present is the last thing that we want in a Budget. We require a solid, sound Budget to put the country's financial resources on a proper equitable basis.

Mr. Harold Davies: When I was thinking of the spirit of adventure, I was thinking particularly of the Chancellor's remarks about the European Free Trade Area. A spirit of adventure would have encouraged and exploited to the full Asian and Far Eastern markets from which we have been withheld, not through the Government's policy, but through the policy of another Government, namely, the United States of America. A spirit of adventure would have hacked away those shackles and gone on to get honest trade wherever we could have had it.

Sir J. Barlow: We have had a very sound Budget, and I am glad that the Chancellor did not embark on as great a spirit of adventure as the hon. Gentleman wishes. The Budget has even been praised by hon. Members opposite. The reduction in the Entertainments Duty will

benefit an enormous number of people, and apparently the Opposition agree that that is a good thing.
I should sincerely like to congratulate the Chancellor on his first Budget speech. It is a sound, practical, common sense Budget which the country requires very badly at present. Some people may say that it is not imaginative. I have no doubt that that will be said in the Press tomorrow. I say, thank God it is not. It is practical. We want practical finance and common sense at present above all things.
I am glad that the Chancellor laid great emphasis on the necessity to continue to control inflation. I am one of those who have consistently criticised the Government for two years for not grappling with the inflation problem long before they did. As we all know, the problem was not seriously tackled until the middle of September last year, when the Government put up the Bank Rate by 2 per cent. and imposed a further bank squeeze in addition to other remedial measures. That was the first time that the Government got to grips with inflation. I am glad that they did it then, although it was very late.
It was most interesting to see that the Chancellor did not think it was time to release the brakes and allow some measure of expansion. Personally, I entirely agree with him. If he releases the brakes and allows expansion too soon, it would be fatal to the economy and industry of the country. It is a very delicate point to decide exactly when to release the brakes. He obviously has far greater information in this matter than any of us. At the same time, the inclination of myself and very many of my hon. Friends is that the brakes should not be released just yet. They should be applied for a little longer.
The Chancellor went on to say that we could not buy ourselves out of the small recession which has shown itself in some quarters. It has been suggested that the United States, who are not so reliant on its export trade and are much more self contained, can buy themselves out of a normal recession. I entirely agree with the Chancellor. We cannot buy ourselves out of a recession, but we can and should work ourselves out of a recession. That is completely within our power. We have the technicians and the resources to do so, and I hope that that


point will be emphasised during the rest of the debate.
The Chancellor emphasised the necessity for exports. This country relies far more on exports than any other similar country in the world. About 25 per cent. of our production has to be shipped overseas. Nearly half of our exports go to Commonwealth or colonial markets. It is important that we should retain and develop those Commonwealth markets. Sometimes I am led to think that we do not pay sufficient attention to the importance of those markets. Knowing the difficulties that many of those Commonwealth countries have owing to the diminishing price of their products, many of which are agricultural and some of which are mining products, they are in an increasingly embarrassing position because they do not have the wherewithal to buy the manufactured goods from this country that they so badly need. It is important that we should, as far as possible, support those Commonwealth countries and help them to develop. They are most anxious to develop and they require capital and machinery to do so. We can, and should, try to help them in that development.
In some cases, it would appear that certain colonial and Commonwealth countries may be trying to establish small local industries, to have a balanced economy, but which cannot be economic in any sense of the word. Taking the Commonwealth as a whole, it would be a great mistake if many of those countries tried to develop small uneconomic and comparatively unimportant industries. Each of the great countries of the Commonwealth should stick to the things which by nature, by climate and in every way it is most capable of producing economically. It is only too easy for different countries to start up small light engineering, textile and other businesses which cannot be economic in any sense of the word. That is one of the risks which I see in colonial and Commonwealth development. I hope that my right hon. Friend the Chancellor will do everything he can to support the Commonwealth countries in their primary industries, so that they can continue to take large quantities of those products which we can manufacture so well in this country.
I should like to refer to the position of Lancashire and her exports. Before

the First World War, Lancashire produced cotton textiles to the extent of 8,000 million yards a year, 75 or 80 per cent. of which was exported to the ends of the world. The cotton textile industry has now diminished to about one-fifth of that, of which 80 per cent. is consumed in this country and only a small percentage shipped abroad. We have the technicians, the operatives, the mills and the machinery, and when the Government are crying out for increased exports it is very galling for Lancashire and Lancashire Members to see increasing quantities of textiles seeping in from various countries in the East.
I regard the Budget as a good one, because it is realistic, sound and full of common sense. The wealth which we have in this country is very limited. All too often we have been spending more than we have been creating. If we were to continue on those lines very long, the result could only be catastrophe. I feel sure that the Chancellor is getting a real grip of our economic position, and for that reason I wish him well.
One small criticism which I would, however, make about my right hon. Friend's proposals is the question of retrospective legislation on his reference to what he called "dividend stripping", as it is known in the City. Many people will feel that he is doing entirely the right thing in closing that loophole, but many will deplore his suggestion that it should be done retrospectively. We on this side regard retrospective legislation rather with horror. Retrospective legislation is unsound. We seldom, if ever, have it in this country and I hope that before the Finance Bill comes before us my right hon. Friend will think again on that one point.

Report of Resolutions to be received Tomorrow.

Committee also report Progress: to sit again Tomorrow.

ADJOURNMENT

Resolved, That this House do now adjourn.—[Mr. Gibson-Watt.]

Adjourned accordingly at sixteen minutes past Eight o'clock.